T/F : Stocks have both diversifiable danger and also undiversifiable threat, however only diversifiable hazard is rewarded through higher intended retransforms.

You are watching: Correlation is the degree to which the returns of two stocks share common risks.

T/F : For big portfolios, investors have to suppose a greater rerevolve for better volatility, yet this does not hold true for individual stocks.
T/ F : If two stocks are perfectly negatively correlated, a portfolio through equal weighting in each stock will constantly have actually a volatility (conventional deviation) of 0.
What is the authorize of the danger premium of a negative-beta stock? (Assume the hazard premium of the industry portfolio is positive.)
T/ F : When we develop an equally weighted portfolio of stocks and also store boosting the number of stocks in the portfolio, the volatility of the portfolio additionally increases.
There are two ways to calculate the expected rerotate of a portfolio. Either calculate the expected rerotate utilizing the value and dividend stream of the portfolio all at once, or calculate the weighted average of the supposed returns of the individual stocks that make up the portfolio. Which rerotate is higher?
T/ F : A portfolio comprises 2 stocks, A and B, through equal quantities of money invested in each. If stock A"s stock price rises and also that of stock B decreases, the weight of stock A in the portfolio will certainly increase.
T/ F : When we integrate stocks in a portfolio, the amount of hazard that is removed counts on the degree to which the stocks challenge prevalent dangers and also relocate together.

See more: What Are The Variances In A 4-Variance Analysis? What Are The Variances In A 4 Variance Analysis

If the rerotate of two stocks has a correlation of 1, what does this suggest about the family member movements in the stock prices?
T/ F: The volatility of an individual stock is even more than the volatility of a well-diversified portfolio of stocks
T/ F: A portfolio of stocks where each stock has actually a huge component of independent hazard benefits once they are hosted in a portfolio bereason the danger is averaged out by diversification.
Which of the following is false?A. Smaller stocks have actually reduced volatility than larger stocks B. Investors carry out not hold more volatility portfolios without expecting higher returnsC. Expected returns must climb proportionately through volatility D. The biggest stocks are typically even more volatile than portfolios of big stocks
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Solutions Manual to Acagency Essentials of Investments8th EditionAlan J. Marcus, Alex Kane, Zvi Bodie
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