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Question
You put half of your money in a stock portfolio that has an expected return of 14% and a standard deviation of 24%. You put the rest of your money in a risky bond portfolio that has an expected return of 6% and a standard deviation of 12%. The stock and bond portfolios have a correlation of .55. The standard deviation of the resulting portfolio will be ________________.A. more than 18% but less than 24%
B. equal to 18%
C. more than 12% but less than 18%
D. equal to 12%
Answer
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Related questions
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A worker plans to retire in 30 years. He hopes to receive $65,000 per year in retirement income. If inflation is forecast at 2.5% per year, what annual income should he plan to receive in the first year of retirement in order to maintain the purchasing power on $65,000?A. $65,000B. $76,159C. $98,398D. $136,342
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Q:
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Q:
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Q:
The yield to maturity of a 10-year zero-coupon bond with a par value of $1,000 and a market price of $625 is _____.A. 4.8%B. 6.1%C. .%D. 10.4%
Q:
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Q:
WEBS differ from mutual funds in that:
I. WEBS can be shorted.
II. WEBS trade continuously on the AMEX.
III. WEBS are passively managed.
A. II only
B. II and III only
C. I and III only
D. I, II, and III
Q:
The major participants who directly purchase securities in the capital markets of other countries are predominantly ____________.
A. large institutional investors
B. individual investors
C. government agencies
D. central banks
Q:
In the PRS financial risk ratings, the United States rates poorly because of the U.S. ________.
I. Large budget deficit
II. Large trade deficit
III. Large amount of total debt
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B. I and II only
C. I and III only
D. I, II, and III
Q:
The yen-per-dollar spot rate is 104. The yen-per-dollar forward rate is 107. If the U.S. risk-free rate is 2.4%, what is the likely yen risk-free rate?
A. 1.24%
B. 2.35%
C. 3.98%
D. 5.35%
Q:
The risk-free rate in the United States is 4%, and the risk-free rate in Japan is 1.2%. If the spot rate of yen to dollars is 105, what is the likely yen-per-dollar forward rate?
A. 101
B. 102
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Q:
Passive investors with well-diversified international portfolios _________.
A. can safely ignore all political risk in emerging markets
B. can expect very large diversification gains from their international investing
C. do not need to be concerned with hedging exposure to foreign currencies
D. can expect returns to be better than the EAFE on a consistent basis
Q:
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A. home-country bias
B. excessive diversification
C. active management
D. passive management
Q:
Which one of the following country risks includes the possibility of expropriation of assets, changes in tax policy, and restrictions on foreign exchange transactions?
A. default risk
B. foreign exchange risk
C. market risk
D. political risk
Q:
EAFE stands for _______.
A. Equity and Foreign Exchange
B. Europe, Australasia, Far East
C. Europe, Asian, Foreign Exchange
D. Europe, American, Far East
Q:
An investor would want to __________ to exploit an expected fall in interest rates.
A. sell S&P 500 Index futures
B. sell Treasury-bond futures
C. buy Treasury-bond futures
D. buy wheat futures
Q:
You are currently long in a futures contract. You instruct a broker to enter the short side of a futures contract to close your position. This is called __________.
A. a cross-hedge
B. a reversing trade
C. a speculation
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Q:
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A. index arbitrage
B. marking to market
C. reversing trades
D. settlement transactions
Q:
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Q:
The option smirk in the Black-Scholes option model indicates that __________.
A. implied volatility changes unpredictably as the exercise price rises
B. stock prices may fall by a larger amount than the model assumes
C. stock prices evolve continuously in today's actively traded markets
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Q:
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A. 10
B. 30
C. 60
D. 90
Q:
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Q:
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Q:
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A. buy the 105 call and write the 100 call
B. buy the 105 call and write the 95 call
C. buy either the 95 or the 100 call and write the 105 call
D. write the 105 call and write either the 95 or the 100 call
Q:
Which one of the following will increase the value of a put option?
A.
a decrease in the exercise price
B.
a decrease in time to expiration of the put
C.
an increase in the volatility of the underlying stock
D.
Q:
Consider the Sharpe and Treynor performance measures. When a pension fund is large and well diversified in total and it has many managers, the __________
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A. Sharpe; Sharpe
B. Sharpe; Treynor
C. Treynor; Sharpe
D. Treynor; Treynor
Q:
A futures contract __________.
A. is a contract to be signed in the future by the buyer and the seller of a commodity
B. is an agreement to buy or sell a specified amount of an asset at a predetermined price on the expiration date of the contract
C. is an agreement to buy or sell a specified amount of an asset at whatever the spot price happens to be on the expiration date of the contract
D. gives the buyer the right, but not the obligation, to buy an asset some time in the future
Q:
At maturity of a futures contract, the spot price and futures price must be approximately the same because of __________.
A. marking to market
B. the convergence property
C. the open interest
D. the triple witching hour
Q:
An established value below which a trader's margin may not fall is called the ________.
A. daily limit
B. daily margin
C. maintenance margin
D. convergence limit
Q:
Margin must be posted by ________.
A. buyers of futures contracts only
B. sellers of futures contracts only
C. both buyers and sellers of futures contracts
D. speculators only