1. Which of the following is INCORRECT?a All of a stock's risk could be unsystematic.b. A negative beta stock has an expected return less than the risk-free rate.c. Anticipated returns on any given stock are always greater than 0.d. Two assets with a correlation of -1 could be combined to create a portfolio with astandard deviation of zero (no risk).2. Which of the following measures the total risk of a portfolio?a. Betab. Standard Deviationc. Correlation Coefficientd. Alpha3. Which of the following stocks have the highest systematic risk?a A stock with high correlation to the market and high returm volatility.b. A stock with low correlation to the market and a high return volatility.c A stock with high correlation to the market and a low return volatility.d. A stock with low correlation to the market and a low return volatility.4. Which of the following companics have the lowest systematic risk?a A company that sells soups (Campbells), beta=0.60b. A coffee company (Starbucks), beta=1.20cA mid-range clothing store company (Abercrombie & Fitch), beta=1.25d. A motorcycle manufacturer (Harley-Davidson), beta=2.00

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1. Which of the following is INCORRECT? a All of a stock's risk could be unsystematic. b. A negative beta stock has an expected return less than the risk-free rate. c. Anticipated returns on any given stock are always greater than 0. d. Two assets with a correlation of -1 could be combined to create a portfolio with a standard deviation of zero (no risk).

1. Which of the following is INCORRECT? a All of a stock's risk could be unsystematic. b. A negative beta stock has an expected return less than the risk-free rate. c. Anticipated returns on any given stock are always greater than 0. d. Two assets with a correlation of -1 could be combined to create a portfolio with a standard deviation of zero (no risk).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1. Which of the following is INCORRECT?
a All of a stock's risk could be unsystematic.
b. A negative beta stock has an expected return less than the risk-free rate.
c. Anticipated returns on any given stock are always greater than 0.
d. Two assets with a correlation of -1 could be combined to create a portfolio with a
standard deviation of zero (no risk).
2. Which of the following measures the total risk of a portfolio?
a. Beta
b. Standard Deviation
c. Correlation Coefficient
d. Alpha
3. Which of the following stocks have the highest systematic risk?
a A stock with high correlation to the market and high returm volatility.
b. A stock with low correlation to the market and a high return volatility.
c A stock with high correlation to the market and a low return volatility.
d. A stock with low correlation to the market and a low return volatility.
4. Which of the following companics have the lowest systematic risk?
a A company that sells soups (Campbells), beta=0.60
b. A coffee company (Starbucks), beta=1.20
cA mid-range clothing store company (Abercrombie & Fitch), beta=1.25
d. A motorcycle manufacturer (Harley-Davidson), beta=2.00

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