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Test your understanding of this topic

Q1.

Find the Beta for Stock given that the Expected Return on Stock is 29.88%, the Expected Return on the Market Portfolios 13.5%, and the Risk-Free Rate is 4.4.

a. 1.02

b. 2.09

c. 2.8

d. 3.99

Q2.

Beta is a measure of what for a particular security?

a. systematic risk

b. unsystematic risk

a. total risk

d. none of the above

Q3.

If you could construct a portfolio where the performance of that portfolio would exactly track that of the market, the beta of that portfolio would be equal to:

a. one.

b. zero.

c negative one.

d. none of the above.

Q4.

The difference between the expected return on the market and the risk-free rate is called:

a. beta.

b. the market rate.

c the equity risk premium.

d. none of the above

Q5.

The risk that covers events like unexpected changes in the economy refers to:

a. systematic risk.

b. unsystematic risk.

c total risk.

d. all of the above.