Question

Choose the correct answer An investor invested $100 in stock A and $100 in stock B....

Choose the correct answer

An investor invested $100 in stock A and $100 in stock B. The price of stock A change from $30 to $50 Stock B changes from $85 to $100. At the end of the year his wealth

a.

Increase by $42

b.

Increase by 124

c.

Increase by $142

d.

Increase by $24

_________________________________________________________________________

If the Rm (return on the market)=12%, Rf=3%. The standard deviation of the min risk portfolio is the market portfolio is 9%. The standard deviation of the optimal portfolio is 18%. Then the sharp ratio ( the slope)

a.

1

b.

2

c.

0.5

d.

9

The price of Alitisalat had been going up for the last few days for no specific reason, however, the Arab Bank announced a takeover of Alitisilat the price didn't move after the announcement. The conclusion is that

a.

The market is a weak but not semi-strong

b.

The market is not a semi-strong and not a strong form

c.

The market is a semi-strong but not a strong

d.

A market is a weak form and semi-strong

If the return on a stock is 6%, the ret on the market is 10%, Rf=4, then B=

a.

6

b.

0.5

c.

4

d.

0.33

Stock A: return 6%; σ=12%;StockB: return8%; σ=5%;StockC: return 11%;σ=6%;StockD: return 7%; σ=3%;StockE:return 5%; σ=5%;StockF:return 10%;σ=11%.The following stocks on the effecient frontier

a.

Stock B,C only

b.

Stock B,C,D only

c.

Stock A,B,F only

d.

Stock D,F, E only

The CAL line is a mix of

a.

Risky and non-risky asset

b.

Market Portfolio and Optimal Portfolio

c.

Min risk and Optimal Portfolio

d.

Risk-free and Min risk portfolio

__________________________________________________________________________________--
An investor invests 10000 in stock A, $5000 in stock B. Stock A' price change from $30 to $50; stock B changes from $85 to $100.Which is the right sentence

a.

2134 available in his account

b.

3124 available in his account

c.

The total return is 0.5

d.

2134 available in her account

Homework Answers

Answer #1

(i). Amount invested in stock "A" = $100

Amount invested in stock "B" = $100

Price of stock "A" = $30

Number of stocks bought from $100 = $100 / $30 = 3.34

change in the price of the Stock "A" = $50 - $30 = $20

Income from the change in the price of Stock "A" = $20 * 3.34 = $66.8

Price of stock "B" = $85

Number of stocks bought from $100 = $100 / $85 = 1.176

change in the price of the Stock "B" = $100 - $85 = $15

Income from the change in the price of Stock "B" = $15 * 1.176 = $17.64

Total wealth from investment in stock "A" & "B" = $66.8 + $17.64 = $84.44

Wealth of the investor per stock = $84.44 / 2 = $42.22

Hence, option(a) is correct.

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