Fin 4223 Final EXAM LATEST UPADATE WITH CORRECT ANSWERS.pdf

Fin 4223 Final EXAM LATEST
UPADATE WITH CORRECT ANSWERS
WhichPofPthePfollowingPstatements

PmustPbePtrue?P-
PCORRECTPANSWERSA.PAllPsecuritiesParePprojectedPtoPhavePhigherPratesPofPreturnPwhenPthePecono


myPboomsPversusPwhenPitPisPnormal.

B.PConsideringPthePpossiblePstatesPofPthePeconomyPemphasizesPthePfactPthatPmultiplePoutcomesPc
anPbePrealizedPfromPanPinvestment.

C.PThePhighestPprobabilityPofPoccurrencePmustPbePplacedPonPaPnormalPeconomyPversusPeitherPaPbo
omPorPaPrecession.

D.PThePtotalPofPthePprobabilitiesPofPthePeconomicPstatesPcanPvaryPbetweenPzeroPandP100Ppercent.

E.PVariousPeconomicPstatesPaffectPaPportfolio'sPexpectedPreturnPbutPnotPthePexpectedPlevelPofPrisk.



YouPownPaPstockPthatPwillPproducePvaryingPratesPofPreturnPbasedPuponPthePstatePofPthePeconomy.P
WhichPonePofPthePfollowingPwillPmeasurePthePriskPassociatedPwithPowningPthatPstock?P-
PCORRECTPANSWERSA.PweightedPaveragePreturnPgivenPthePmultiplePstatesPofPthePeconomy



B.PratePofPreturnPforPaPgivenPeconomicPstate

C.PvariancePofPthePreturnsPgivenPthePmultiplePstatesPofPthePeconomy

D.PcorrelationPbetweenPthePreturnsPgivePthePvariousPstatesPofPthePeconomy

E.PcorrelationPofPthePweightedPaveragePreturnPasPcomparedPtoPthePmarket



YouPownPaPportfolioPcomprisedPofP4PstocksPandPthePeconomyPhasP3PpossiblePstates.PAssumePyouPin
vestPyourPportfolioPinPaPmannerPthatPresultsPinPanPexpectedPratePofPreturnPofP7.5Ppercent,Pregardle
ssPofPthePeconomicPstate.PGivenPthis,PwhatPmustPbePvaluePofPthePportfolio'sPvariancePbe?P-
PCORRECTPANSWERSA.Pnegative,PbutPnotP-1



B.P-1.0

C.P0.0

D.P1.0

E.Ppositive,PbutPnotP+1

, APportfolioPcomprisedPofPwhichPonePofPthePfollowingPisPmostPaptPtoPbePthePminimumPvariancePpor
tfolio?P-PCORRECTPANSWERSA.P100PpercentPstocks

B.P100PpercentPbonds

C.P50/50PmixPofPstocksPandPbonds

D.P30PpercentPstocksPandP70PpercentPbonds

E.P30PpercentPbondsPandP70PpercentPstocks



WhichPonePofPthePfollowingPstatementsPisPcorrectPconcerningPassetPallocation?P-
PCORRECTPANSWERSA.PBecausePtherePisPanPidealPmix,PallPinvestorsPshouldPusePthePsamePassetPallo


cationPforPtheirPportfolios.

B.PThePminimumPvariancePportfolioPwillPhavePaP50/50PassetPallocationPbetweenPstocksPandPbonds.

C.PAssetPallocationPaffectsPthePexpectedPreturnPbutPnotPthePriskPlevelPofPaPportfolio.

D.PTherePisPanPidealPassetPallocationPbetweenPstocksPandPbondsPgivenPaPspecifiedPlevelPofPrisk.

E.PAssetPallocationPshouldPplayPaPminorProlePinPportfolioPconstruction.



YouPcurrentlyPhavePaPportfolioPcomprisedPofP70PpercentPstocksPandP30PpercentPbonds.PWhichPoneP
ofPthePfollowingPmustPbePtruePifPyouPchangePthePassetPallocation?P-
PCORRECTPANSWERSA.PThePexpectedPreturnPwillPremainPconstant.



B.PThePrevisedPportfolioPwillPbePperfectlyPnegativelyPcorrelatedPwithPthePinitialPportfolio.

C.PThePtwoPportfoliosPcouldPhavePsignificantlyPdifferentPstandardPdeviations.

D.PThePportfolioPvariancePwillPbePunaffected.

E.PThePportfolioPvariancePwillPmostPlikelyPdecreasePinPvalue.



WhichPonePofPthePfollowingPdistinguishesPaPminimumPvariancePportfolio?P-
PCORRECTPANSWERSA.PlowestPriskPportfolioPofPanyPpossiblePportfolioPgivenPthePsamePsecuritiesPbu


tPinPdifferingPproportions

B.PlowestPriskPportfolioPpossiblePgivenPanyPspecifiedPexpectedPratePofPreturn