CHAPTER 21 QUIZ 51 TO 55
51. Which of the following is NOT a problem associated with proving the validity of the security market line?
A. The appropriate risk-free and market rates
B. The additional return required for each additional increment of risk in the market place
C. The stability of beta on an individual security over time
D. All of the above are associated problems
52. Countercyclical investments are more likely to have
A. High positive correlation with a normal portfolio
B. Slight positive correlation with a normal portfolio
C. No correlation with a normal portfolio
D. High negative correlation with a normal portfolio
53. For two investments with a correlation coefficient (rij) less than +1, the portfolio standard deviation will be __________ the weighted
average of the individual investments' standard deviation.
A. More than
B. Less than
C. Equal to
D. Zero compared to
54. Two investments that have a correlation coefficient of -1 will have a portfolio standard deviation of _____________.
A. -1
B. 0
C. +.5
D. +1
55. The investor wants to achieve the __________ risk-return indifference curve.
A. Lowest
B. Highest
C. Median
D. Mean
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