Posted by Anonymous on Sunday, January 31, 2010 at 9:30pm.
Please check and correct my answers.
Investors want ____ returns and ___ risk.
Answer: high return, low risk
Which statement about the efficient set, minimumvariance set and feasible is incorrect?
a) the minimum variance is the set of all portfolios with the lowest variance for a given expected return
b) the efficient set is smaller than the feasible set
c) the efficient set is a subset of a feasible set
d) one’s opinions determine the efficient set
e) one’s preference determine the feasible set
Answer: d
Stock X with $20k invested returned 20%. Stock B with $60k invested returned 8%. Stock Z with $20k invested returned 10%. What was the overall portfolio return?
Answer: 15.8%
Ex ante is _____ (before or after the fact) and ex post is _____ (based on the opinions of forecasters, history, observation).
Answer:
ex ante: before the fact
ex post: history
Which statement(s) is correct?
a) Portfolio variance will always be lower than portfolio return
b) The calculation of neither expected portfolio return no expected portfolio variance depends on the state of nature that actually occurs.
Answer: both are correct
You have 2 standard 6sided dice. Let a equal the value of the first, b equal the value of the second and c equal the sum of the two values. What is the correlation?
Answer: no relationship, 0 correlation
When the correlation between 2 securities is 0, there is no reduction in risk through combining the securities into a portfolio. This is the only situation where forming portfolios does not provide risk reduction to an investor. True or False.
Answer: True

Basic Finance Risk vs Return  Dr. Richard Deaves, Tuesday, February 2, 2010 at 9:03pm
I am very disappointed that one of my students would commit such a blatant violation of the academic integrity policy. Rest assured, if any student submits an assignment which even moderately resembles the one posted here you will be prosecuted.
I will ask that the original author of this post please come forward and identify themselves to me. If you come forward before 9am tomorrow i will not persue this violation any further.
Dr. Richard Deaves, PhD
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