Hello there, I need some help for these very easy FIN 361 (Financial Management) questions please.

1) Part 1 Diversification is _____. It _____.
BUYING MORE THAN THREE STOCKS; REDUCES OVERALL PORTFOLIO RISK
THE MIXING OF DIFFERENT ASSETS WITHIN A PORTFOLIO; INCREASES THE EXPECTED RETURN
THE MIXING OF DIFFERENT ASSETS WITHIN A PORTFOLIO; REDUCES OVERALL PORTFOLIO RISK
BUYING MORE THAN THREE STOCKS; INCREASES THE EXPECTED RETURN
2) Part 1 As different securities are added to a portfolio, the portfolio’s total risk _____.
FALLS TO ZERO
IS UNAFFECTED
DECREASES
INCREASES
3) Intro Nautilus Clothing’s stock has a 40% chance of producing a 15% return, a 20% chance of producing a 18% return, and a 40% chance of producing a -13% return.
Part 1 What is the stock’s expected return?

4) Intro The table below shows the expected rates of return for three stocks and their weight in some portfolio:
Stock A
Stock B
Stock C
Expected return
0.08
0.03
0.12
Weight
0.2
0.2
0.6
Part 1 What is the expected portfolio return

5) Intro The table below shows the expected rates of return for three stocks and their weights in some portfolio:
Stock A
Stock B
Stock C
Portfolio weights
0.4
0.2
0.4
State
Probability
Expected returns
Recession
0.3
0.06
0.03
0.15
Boom
0.7
0.11
0.05
0.16
Part 1 What is the portfolio return during a recession?

Part 2 What is the expected portfolio return?

Part 3 What is the standard deviation of the portfolio returns?

6) Part 1 Securities whose prices move less than the market have _____ betas.
LOWER
HIGHER
NEGATIVE
NO
7) Intro The table below shows the betas and portfolio weights for 3 stocks:
Portfolio weights
Stock
Beta
Portfolio 1
Portfolio 2
A
1.7
0.3
0.1
B
1.1
0.5
0.4
C
0.4
0.2
0.5
Calculate the beta of each portfolio.
Part 1 What is the beta of portfolio 1?

Part 2 What is the beta of portfolio 2?

Part 3 If you are more concerned about risk than return, which portfolio should you pick?
PORTFOLIO 1
PORTFOLIO 2
8) Intro You’ve assembled the following portfolio:
Stock
Expected return
Beta
Portfolio weight
1
0.074
1.8
0.2
2
0.053
1.1
0.5
3
0.047
0.9
0.3
Part 1 What is the beta of the portfolio?

Part 2 What is the expected return of your portfolio?

9) Part 1 The graphical representation of the CAPM is called the _____.
SECURITY CHARACTERISTIC LINE
YIELD CURVE
CAPM LINE
SECURITY MARKET LINE
10) Intro A stock has a beta of 1.8. The risk-free rate is 4%. Assume that the CAPM holds.
Part 1 What is the expected return for the stock if the expected return on the market is 8%?

Part 2 What is the expected return for the stock if the expected market risk premium is 8%?

11) Intro Use the expected return-beta equation from the CAPM.
Part 1 What is the expected return for a stock if the risk-free rate is 2%, beta 0.6 and the expected return for the market portfolio is 6%?
Part 2 What is the risk-free rate if beta is 1.1, the expected return 6.3% and the expected return for the market portfolio is 6%?

Part 3 What is beta if the risk-free rate is 2%, the expected return 12% and the expected return for the market is 6%?
Part 4 What is the expected return for the market if the risk-free rate is 2%, beta 0.6 and the expected return 12%?

12) Intro We know the following expected returns for stocks A and B, given different states of the economy:
State (s)
Probability
E(rA,s)
E(rB,s)
Recession
0.3
-0.04
0.04
Normal
0.5
0.11
0.07
Expansion
0.2
0.19
0.11
The expected return on the market portfolio is 0.08 and the risk-free rate is 0.02.
Part 1 What is the standard deviation of returns for stock A?
.
Part 2 What is the standard deviation of returns for stock B?

Part 3 What is the beta for stock A?

Part 4 What is the beta for stock B?

Part 5 Which stock has more total risk?
THE STOCK WITH THE LOWER STANDARD DEVIATION
THE STOCK WITH THE HIGHER STANDARD DEVIATION
THE STOCK WITH THE HIGHER BETA
THE STOCK WITH THE LOWER BETA
Part 6 Which stock has more systematic risk?
THE STOCK WITH THE LOWER BETA
THE STOCK WITH THE HIGHER BETA
THE STOCK WITH THE HIGHER STANDARD DEVIATION
THE STOCK WITH THE LOWER STANDARD DEVIATION

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