Question

9: A stock’s required return is equal to the dividend yield plus the capital gains yield? TRUE OR FALSW\E

10: Which one of the following categories has the highest risk premium for the period 1926-2019? A Large-company stocks, B Long-term government bonds, C Small-company stocks D US Treasury Bills

12:

The purpose of diversification is to do which of the following?

	A.	Reduce the portfolio’s systematic risk level
	B.	Increase the expected risk premium
	C.	Reduce the portfolio’s unsystematic risks
	D.	Reduce the beta of the portfolio to zero

13: Private mortgage insurance (PMI) benefits borrowers because it helps them make mortgage payments when they are having financial difficulty. true or false

14: An annuity due makes payments at the beginning of the period. TRUE OR FALSE

Question 15

Of the following 4 portfolios, which one is the most diversified?

A	B	C	D
Amazon Starbucks Best Buy Disney	Netflix Toyota Home Depot Pfizer (pharmaceuticals)	Netflix Apple Sony Pfizer (pharmaceuticals)	Netflix Amazon Pfizer (pharmaceuticals) Disney

		A
		B
		C
		D

Answer 1

9. True. The returns one can make from a stock are these two.

10. C because small companies have more risks associated with them. They can go out of business anytime because of their small size.

12. C. Diversification reduces the unsystematic or idiosyncratic risks.

13. False, it will help the lenders who will lend easily as their money is secured by this guarantee.

14. True. Definition of annuity due.

15.Option B because it has many different industries in it but the other options have one or more options in the same industry.