1.
True or False If two investments offer the same expected return, most
investors would prefer the one with higher variance.
2. True
or False Portfolios that offer the
highest expected return for a given variance or standard deviation are known as
efficient portfolios.
3 True or False Investors are mainly concerned with those
risks that can be eliminated through diversification.
4. True or False Beta measures the marginal contribution of a
stock to the risk of a well-diversified portfolio.
5 True or False According to CAPM, all investments plot along
the security market line.
6.
True or False Tests of CAPM have
confirmed that Capital Asset Pricing Model holds good under all
circumstances.
7 True or False Both the CAPM and the APT stress that
expected return is not affected by unique, nonsystematic, or firm specific
risk.
8.
True or False All portfolios on the
efficient frontier are efficient portfolios.
9
True or False When we introduce
borrowing and lending at the risk-free rate with the market portfolio much of
the efficient frontier is now inefficient.
10 True or False The Market portfolio is a risky portfolio that
has the average risk for the economy. The beta of this portfolio is one and we
typically use a market-index to represent this portfolio in practice.
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