CHAPTER 21 QUIZ 46 TO 50

CHAPTER  21  QUIZ  46 TO 50
46. The beta coefficient is a measure of
A. The relationship between the return of an individual stock and the return on the market
B. The relationship between the return on a stock and the return on the portfolio
C. The relationship between the portfolio risk and the market risk
D. None of the above
47. Systematic risk is rewarded with a premium in the marketplace because
A. That risk is peculiar to the stock or industry
B. It represents a random occurrence which could not have been foreseen
C. It is associated with market movements which cannot be eliminated through diversification
D. None of the above
48. If the _____ of any individual stock is known, an investor can use the _____ to determine the expected rate of return on that stock
A. Beta; capital market line
B. Beta; security market line
C. Standard deviation; capital market line
D. None of the above
49. If the market rate of return is 10 percent and the beta on a particular stock is .78, the return on the stock will be
A. Greater than 10 percent
B. Greater or less than 10 percent, depending on the risk free rate of return
C. Less than 10 percent
D. Dependent on some other factor
50. Which of the following are assumptions of the capital asset pricing model?
A. Funds can be borrowed or lent in unlimited quantities at risk-free rate
B. The objective of all investors is to maximize their expected utility over the same one-period time frame using the same basis for evaluating
investments
C. There are not taxes or transaction costs associated with any investment
D. All of the above are correct assumptions