ch 13

expected return

portfolio

systematic

unsystematic

The principle of diversification tells us that:

beta

security market line

market risk premium

total

I, II, III, and IV

I, II, and III only

If a stock portfolio is well diversified, then the portfolio variance:

may be less than the variance of the least risky stock in the portfolio.

Which one of the following is an example of systematic risk?

Unsystematic risk:

Which one of the following is an example of unsystematic risk?

I and IV only

I and III only

The primary purpose of portfolio diversification is to:

eliminate asset-specific risk.

a decrease in the portfolio standard deviation

10

expected rate of return

II and IV only

The intercept point of the security market line is the rate of return which corresponds to:

the risk-free rate.

A stock with an actual return that lies above the security market line has:

risk premium.

risk premium

I, III, and IV only

expected return

portfolio

systematic

unsystematic

The principle of diversification tells us that:

beta

security market line

market risk premium

total

I, II, III, and IV

I, II, and III only

If a stock portfolio is well diversified, then the portfolio variance:

may be less than the variance of the least risky stock in the portfolio.

Which one of the following is an example of systematic risk?

Unsystematic risk:

Which one of the following is an example of unsystematic risk?

I and IV only

I and III only

The primary purpose of portfolio diversification is to:

eliminate asset-specific risk.

a decrease in the portfolio standard deviation

10

expected rate of return

II and IV only

The intercept point of the security market line is the rate of return which corresponds to:

the risk-free rate.

A stock with an actual return that lies above the security market line has:

risk premium.

risk premium

I, III, and IV only