T/F : Stocks have both diversifiable risk and also undiversifiable risk, but only diversifiable threat is bonus with higher expected returns.

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

T/F : For large portfolios, investors need to expect a greater return for greater volatility, yet this does not host true because that individual stocks.
T/ F : If two stocks are perfectly negative correlated, a portfolio v equal weighting in each stock will constantly have a volatility (standard deviation) the 0.
What is the sign of the danger premium the a negative-beta stock? (Assume the risk premium of the sector portfolio is positive.)
T/ F : when we type an equally weighted portfolio of stocks and also keep raising the number of stocks in the portfolio, the volatility of the portfolio also increases.
There are two ways to calculation the meant return of a portfolio. Either calculate the expected return making use of the value and dividend currently of the portfolio as a whole, or calculation the weighted average of the meant returns the the individual share that consist of the portfolio. I m sorry return is higher?
T/ F : A investment portfolio comprises two stocks, A and also B, v equal amounts of money invested in each. If share A"s stock price increases and that of stock B decreases, the load of stock A in the portfolio will certainly increase.
T/ F : as soon as we combine stocks in a portfolio, the amount of threat that is removed depends top top the level to which the stocks face typical risks and also move together.

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

If the return of 2 stocks has a correlation that 1, what walk this imply about the relative activities in the stock prices?
T/ F: The volatility of an individual stock is more than the volatility the a well-diversified investment portfolio of stocks
T/ F: A portfolio of stocks whereby each stock has actually a large component that independent threat benefits as soon as they are organized in a portfolio due to the fact that the threat is averaged out through diversification.
Which the the adhering to is false?A. Smaller sized stocks have actually lower volatility than bigger stocks B. Investors carry out not hold much more volatility portfolios there is no expecting greater returnsC. Supposed returns need to rise proportionately with volatility D. The biggest stocks room typically much more volatile than portfolios of huge stocks




Solutions manual to companion Essentials that Investments8th EditionAlan J. Marcus, Alex Kane, Zvi Bodie
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