Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
these are simple mcq question ,please explain why you choose that particular option
Transcribed Image Text:QUESTION 2
Ms Obang is reviewing the performance of one of the shares in her portfolio. She bought the share a year ago for £4.00 (ex-
div). Over the year it paid a dividend of 20p and the share price currently stands at £4.20 (ex-div). The shares equity beta is
1.4. The yield on short-date Treasury Bills over the year has been 1.2% and the Market Return is 6%.
Using the CAPM, what has been the performance of the share over the last year?
O A. 2.1% under-performance
OB.
4.6% under-performance
Oc.
2.1% over-performance
OD.
4.6% over- performance
O E. 1.6% over-performance
Transcribed Image Text:QUESTION 1
Mrs Azaz is going to invest in a two-share portfolio. You are given the following details of the two shares she is considering.
She wishes to invest 60% in Share A and 40% in Share B.
Share A
Share B
Returns
16.0 per cent
11.0 per cent
Standard deviation
18.1 per cent
10.7 per cent
The correlation coefficient between the two shares is 0.271. What is the expected risk and return of the investors portfolio?
OA 14% Return
12.7% Standard Deviation
O B. 14% Return
14.4% Standard Deviation
OC. 14% Return
15.1% Standard Deviation
O D. 13.5% Return
14.1% Standard Deviation
O E. 13.5% Return
12.7% Standard Deviation
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