P04 - Risks (Sol)

PORTF0LIO MANAGEMENT PORTF0LIO MANAGEMENT Beta  Beta  Portfolio Beta Portfolio Beta

11_{.. YoYou invet !"u invet !"## in e$ur## in e$urit% A &it% A &it' a (eta of 1.) an* !+it' a (eta of 1.) an* !+## in e$ur## in e$urit% B &itit% B &it' a (eta of ,#.)#. ' a (eta of ,#.)#. T'eT'e} (eta of t'e reultin- ortfolio i /M0

(eta of t'e reultin- ortfolio i /M0

aa.. 11..++##.. $$.. ##.."".. ((.. 11..####.. **.. ##..""++.. e.

e. #.#.2#2#. . BBo*o*ieie

))_{.. A $o3A $o3an% 'oan% 'ol* t'l* t'e folloe follo&in- t&in- to$4 oro$4 ortfoltfolio5io5} S

Sttoo$$44 6 6 oof f TToottaal l PPoorrttffoolliioo BBeetta a CCooeeffffii$$iieenntt 7 7 ))##66 ..22 8 8 ++##66 .."" Y Y ##66 11..## 99 11##66 ))..##

T'e (eta of t'e ortfolio i /M0 T'e (eta of t'e ortfolio i /M0 A.

A. ).# ).# C. C. .:.:

B.

B. 1.1 1.1 D. D. .2 .2 Glei3Glei3

Beta of Ne& Sto$4 in t'e Portfolio Beta of Ne& Sto$4 in t'e Portfolio

_{.. YoYou are 3ana-in- a ortu are 3ana-in- a ortfolio of fivfolio of five to$4 t'at are to$4 t'at are 'el* in e;ual a3e 'el* in e;ual a3ount. T'e $ount. T'e $urrent (eta ofurrent (eta of} t'e ortfolio i 1.+< an* t'e (eta of Sto$4 A i 1.=. If Sto$4 A i ol*< &'at &oul* t'e (eta of t'e t'e ortfolio i 1.+< an* t'e (eta of Sto$4 A i 1.=. If Sto$4 A i ol*< &'at &oul* t'e (eta of t'e rela$e3ent to$4 'ave to (e to ro*u$e a ne& ortfolio (eta of 1.)=> /D0

rela$e3ent to$4 'ave to (e to ro*u$e a ne& ortfolio (eta of 1.)=> /D0 A. A. #.?= #.?= C. C. 1.)=1.)= B. B. #.:# #.:# D. D. 1.+# 1.+# Glei3Glei3 Aet Beta Aet Beta =.

=. T'e (eta of *eT'e (eta of *e(t i #.+ an* (et(t i #.+ an* (eta of e;uit% ia of e;uit% i 1.).  1.). T'e *e(t,eT'e *e(t,e;uit% rati;uit% ratio i #.2. o i #.2. Cal$ulaCal$ulate t'ete t'e (eta of t'e aet of t'e fir3.

(eta of t'e aet of t'e fir3. /Au3e no ta@e.0/Au3e no ta@e.0 A

A.. ##..: : CC.. 11..""

B.

B. #.#.+2 +2 D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM ".

". A fir3A fir3 e;uit% (eta i #.2 an e;uit% (eta i #.2 an* t'e *e(t (eta i #.. * t'e *e(t (eta i #.. If t'e 3ar4eIf t'e 3ar4et value of *e(t i !+# 3ilt value of *e(t i !+# 3illionlion an* t'at of e;uit% i !1"# 3illion< &'at i t'e (eta of t'e aet of t'e fir3>

an* t'at of e;uit% i !1"# 3illion< &'at i t'e (eta of t'e aet of t'e fir3> A

A.. ##..? ? CC.. 11..11

B.

B. #.#.2 2 D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM

++_{.. T'e 3ar4eT'e 3ar4et value of t'e 'art value of t'e 'are of Ate of Atroiel*roiel* Cororati Cororation i $urrentlon i $urrentl% !)+ 3ill% !)+ 3illion< an* t'eiion< an* t'eirr} (eta i 1.+. Atroiel* 'a a no3inal !" 3illion of 26 $ouon *e(enture outtan*in- &'i$' (eta i 1.+. Atroiel* 'a a no3inal !" 3illion of 26 $ouon *e(enture outtan*in- &'i$' 3ature in ? %ear. T'ee *e(enture 'ave a (eta of #.1< an* t'e% $urrentl% %iel* 1#6. 7'at i 3ature in ? %ear. T'ee *e(enture 'ave a (eta of #.1< an* t'e% $urrentl% %iel* 1#6. 7'at i t'e (eta of Atroiel* aet> /VD0

t'e (eta of Atroiel* aet> /VD0 A.

A. #.2) #.2) C. C. ).=).=

B.

B. #.?= #.?= D. D. 1.1" 1.1" Glei3Glei3

==_{.. Co3uSoCo3uSolution Inlution In$. to$4 '$. to$4 'ave a total 3ave a total 3ar4et valar4et value of !=# 3ilue of !=# 3illion an* a *elion an* a *e(t of !# 3i(t of !# 3illion.llion.} T'e $urrent Treaur% (ill rate i "6< an* t'e e@e$te* 3ar4et ri4 re3iu3 i :6. A lot of t'e T'e $urrent Treaur% (ill rate i "6< an* t'e e@e$te* 3ar4et ri4 re3iu3 i :6. A lot of t'e return on t'e to$4 a-aint t'e 3ar4et return 'o& a $atter of oint t'rou-' &'i$' a line return on t'e to$4 a-aint t'e 3ar4et return 'o& a $atter of oint t'rou-' &'i$' a line $an (e fitte* &it' a loe of +=. 7'at i t'e (eta of t'e $o3an% aet> /D0

$an (e fitte* &it' a loe of +=. 7'at i t'e (eta of t'e $o3an% aet> /D0 A.

A. 1.)= 1.)= C. C. 1.?=1.?=

B.

B. #.")= #.")= D. D. 1.""? 1.""? Glei3Glei3 ""_{.. AriAriona Roona Ro$4< an all$4< an all,e;u,e;uit% fiit% fir3< $urr3< $urrentrentl% 'a a (eta of 1.)=l% 'a a (eta of 1.)=< 4< 4}

R

R  F ?   F ? er$ent< er$ent< an* 4an* 4MM F  F 1+1+ er$ent.

er$ent. Suoe t'e fir3 ellSuoe t'e fir3 ell 1# er$ent of it aet &it' (eta F 1.)= an* ur$'ae t'e 1# er$ent of it aet &it' (eta F 1.)= an* ur$'ae t'e a3e roortion of ne& aet &it' a (eta of 1.1.

a3e roortion of ne& aet &it' a (eta of 1.1. 7'at &ill (e t'e fir3 7'at &ill (e t'e fir3 ne& overall re;uire*ne& overall re;uire* rate of return< an* &'at rate of return 3ut t'e ne& aet ro*u$e in or*er to leave t'e to$4 rate of return< an* &'at rate of return 3ut t'e ne& aet ro*u$e in or*er to leave t'e to$4 ri$e un$'an-e*> /M0 ri$e un$'an-e*> /M0 aa.. 11==..""++==66H H 11==..""++==66 **.. 11==..??==##66H H 11==..""++==66 ((.. 11==..??==##66H H 11++..??####66 ee.. 11++..??==##66H H 11==..??==##66 $$. 1. 1==..""++==66H H 11++..??####66 BBrrii--''aa33 E;uit% Beta E;uit% Beta 2.

2. A fir3A fir3 aet (eta i #.= an* *e(t (eta i ero.  aet (eta i #.= an* *e(t (eta i ero. If t'e *e(te;uitIf t'e *e(te;uit% ratio i 1."< &'at i t'e e;uit%% ratio i 1."< &'at i t'e e;uit% (eta of t'e -iven>

(eta of t'e -iven> A

A.. ##..2 2 CC.. 11..##

B.

B. 1.1.  D.D. NoNone ne of of t't'e e a(a(ovovee B  MB  M ?.

?. T'e ree,lT'e ree,loat Co3an%oat Co3an%< a $o3an% in t'e "6 ta@ (ra$4et< 'a ri4le *e(t in it $aital< a $o3an% in t'e "6 ta@ (ra$4et< 'a ri4le *e(t in it $aital tru$ture &'i$' 3a4e u +#6 of t'e

tru$ture &'i$' 3a4e u +#6 of t'e total $aital tru$ture< an* e;uit% i t'e ot'er "#6. total $aital tru$ture< an* e;uit% i t'e ot'er "#6. T'eT'e (eta of t'e aet for t'i (uine i #.2 an* t'e e;uit% (eta i5

(eta of t'e aet for t'i (uine i #.2 an* t'e e;uit% (eta i5 A A.. ##..22# # CC.. ##..== B B.. ##..?  ?  DD.. 1 .1 .11+ + B B   MM Diviion Beta Diviion Beta

??_{.. Sun State MiSun State Minin- In$.< an allnin- In$.< an all,e;uit% fi,e;uit% fir3< i $onir3< i $oni*erin- t'e for3*erin- t'e for3ation of a ne& *iviation of a ne& *iviion t'at &ilion t'at &illl} in$reae t'e aet of t'e fir3 (% =# er$ent. Sun State $urrentl% 'a a re;uire* rate of return in$reae t'e aet of t'e fir3 (% =# er$ent. Sun State $urrentl% 'a a re;uire* rate of return R

RPPCCPPAA<<AAIICCPPAA<<CCMMAACCIIAAEE88AAMMIINNAATTIIOONNJJEESSTTIIOONNSS PPaa--ee11ooff""""

M

MAANNAAGGEEMMEENNTTAADDVVIISSOORRYYSSEERRVVIICCEESS RRIISSKKSS

of 12 er$ent< . S. Treaur% (on* %iel* ? er$ent< an* t'e 3ar4et ri4 re3iu3 i = er$ent. of 12 er$ent< . S. Treaur% (on* %iel* ? er$ent< an* t'e 3ar4et ri4 re3iu3 i = er$ent. If Sun State &ant to re*u$e it re;uire* rate of return to 1" er$ent< &'at i t'e 3a@i3u3 If Sun State &ant to re*u$e it re;uire* rate of return to 1" er$ent< &'at i t'e 3a@i3u3 (eta $oeffi$ient t'e ne& *iviion $oul* 'ave> /D0

(eta $oeffi$ient t'e ne& *iviion $oul* 'ave> /D0

aa.. ))..)) **.. 11..""

((.. 11..## ee.. ))..##

$$.. 11..22 BBrrii--''aa33

Given t'e Correlation Coeffi$ient (et&een t'e Sto$4 an* Mar4et Portfolio Given t'e Correlation Coeffi$ient (et&een t'e Sto$4 an* Mar4et Portfolio +1.

+1. T'e $orrelatiT'e $orrelation $oeffi$ion $oeffi$ient (et&een to$4 A ent (et&een to$4 A an* t'e 3ar4et ortfolan* t'e 3ar4et ortfolio i L#.". io i L#.". T'e tan*ar*T'e tan*ar* *eviatio

*eviation of return of n of return of t'e to$4 i #6 an* t'at t'e to$4 i #6 an* t'at of t'e 3ar4et ortfolio i )#6. of t'e 3ar4et ortfolio i )#6. Cal$ulatCal$ulate t'ee t'e (eta of t'e to$4.

(eta of t'e to$4. A

A.. ##..: : CC.. 11..11

B

B.. 11..# # DD.. ##.." " B B   MM

+).

+). T'e $orrelatT'e $orrelation $oeffiion $oeffi$ient (et&ee$ient (et&een to$4 B an* t'e 3ar4et ortfn to$4 B an* t'e 3ar4et ortfolio i #.2. olio i #.2. T'e tan*arT'e tan*ar** *eviation of t'e to$4 B i =6 an* t'at of t'e 3ar4et i )#6.

*eviation of t'e to$4 B i =6 an* t'at of t'e 3ar4et i )#6. Cal$ulate t'e (eta of t'e to$4.Cal$ulate t'e (eta of t'e to$4. A

A.. 11..# # CC.. ##..22

B

B.. 11..+ + DD.. ##..? ? B B   MM

Given t'e itori$al No3inal Return for t'e Sto$4  Mar4et Portfolio Given t'e itori$al No3inal Return for t'e Sto$4  Mar4et Portfolio +.

+. itoriitori$al no3inal ret$al no3inal return for to$4 A iurn for to$4 A i 26< L1#6 an* L))6 26< L1#6 an* L))6. . T'e no3inaT'e no3inal return for t'el return for t'e 3ar4et ortfolio i L"6< L126 an* )+6.

3ar4et ortfolio i L"6< L126 an* )+6. Cal$ulate t'e (eta for to$4 A.Cal$ulate t'e (eta for to$4 A. A

A.. 11..""+ + CC.. 11..## B.

B. #.#."1 "1 D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM ++.

++. T'e t'ree %eaT'e t'ree %ear annual return for r annual return for to$4 B $o3eto$4 B $o3e out to (e #6< 1#6 an* )" out to (e #6< 1#6 an* )"6. 6. T'ree %earT'ree %ear annual return for t'e 3ar4et ortfolio are L"6< 126< )+6.

annual return for t'e 3ar4et ortfolio are L"6< 126< )+6. Cal$ulate t'e (eta for t'e to$4.Cal$ulate t'e (eta for t'e to$4. A

A.. 11.." " CC.. ##

B.

B. #.#.?+ ?+ D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM

Required Return Required Return

22_{.. .G. Penn%.G. Penn%a$4er i ina$4er i interete* iterete* in fin*in- t'n fin*in- t'e aroriate aroriate *i$ount re *i$ount rate for it neate for it ne& roe$t fo& roe$t forr} 3a4in- (lue< in4< an* %ello& &i*-et. T'e avera-e (eta of a -rou of $olore* &i*-et 3a4in- (lue< in4< an* %ello& &i*-et. T'e avera-e (eta of a -rou of $olore* &i*-et 3anufa$turer i 1.+ an* t'eir avera-e *e(t,e;uit% ratio i #.#. Penn%a$4er lan to 'ave a 3anufa$turer i 1.+ an* t'eir avera-e *e(t,e;uit% ratio i #.#. Penn%a$4er lan to 'ave a *e(t,e;uit% ratio of #.)#. If t'e ri4,free rate i "6 an* t'e e@e$te* ri4 re3iu3 on t'e *e(t,e;uit% ratio of #.)#. If t'e ri4,free rate i "6 an* t'e e@e$te* ri4 re3iu3 on t'e 3ar4et ortfolio i :6< &'at i t'e re;uire* return for t'e roe$t> /D0

3ar4et ortfolio i :6< &'at i t'e re;uire* return for t'e roe$t> /D0 A. A. :.?)6 :.?)6 C. C. 1".#261".#26 B. B. ?.#26 ?.#26 D. D. 1=.?)6 1=.?)6 Glei3Glei3 Expected Return Expected Return )2.

)2. Sto$4 A 'aSto$4 A 'a an e@e$te* return of 1#6 er %ear an* to$4 B 'a an e@e$te* return of )#6. an e@e$te* return of 1#6 er %ear an* to$4 B 'a an e@e$te* return of )#6. If ==6 of t'e fun* are invete* in to$4 B< &'at i t'e e@e$te* return on t'e ortfolio of to$4 If ==6 of t'e fun* are invete* in to$4 B< &'at i t'e e@e$te* return on t'e ortfolio of to$4 A an* to$4 B>

A an* to$4 B> A

A.. 11##6 6 CC.. 11++..==66

B.

B. )#)#6 6 D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM 12.

12. lori*a Co3lori*a Co3an% /C0 an* Minnan% /C0 an* Minneota Co3aeota Co3an% /MC0 are (ot' ervi$n% /MC0 are (ot' ervi$e $o3aniee $o3anie. . T'eirT'eir 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. If CIf C an* MC are $o3(ine* in a ortfolio &it' =#6 of t'e fun* invete* in ea$'< $al$ulate t'e an* MC are $o3(ine* in a ortfolio &it' =#6 of t'e fun* invete* in ea$'< $al$ulate t'e e@e$te* return on t'e ortfolio.

e@e$te* return on t'e ortfolio. A

A.. 11##6 6 CC.. 11""66

B.

B. 116 6 D.D. NoNone ne of of t't'e e a(a(ovove. e. B B   MM 1".

1". T'e 'itoriT'e 'itori$al return *ata for t'e at t're$al return *ata for t'e at t'ree %ear for Sto$4 B an* t'e to$4 3ar4et ore %ear for Sto$4 B an* t'e to$4 3ar4et ortfoliotfolio are5 Sto$4 B5, )+6< #6< )+6< Mar4et Portfolio5, 1#6< 1)6< )#6.

are5 Sto$4 B5, )+6< #6< )+6< Mar4et Portfolio5, 1#6< 1)6< )#6. Cal$ulaCal$ulate t'e e@e$te*te t'e e@e$te* return for Sto$4 B an* t'e 3ar4et ortfolio.

return for Sto$4 B an* t'e 3ar4et ortfolio. A.

A. StoSto$4 $4 B B 1"61"6< < MarMar4et 4et PorPortfoltfolio5 io5 1+6 1+6 C.C. Sto$Sto$4 4 B B )+6< )+6< MarMar4et 4et PortPortfolifolio5 o5 1)61)6 B.

B. StoSto$4 $4 B B 1+61+6< < MarMar4et 4et PorPortfoltfolio5 io5 1"6 1"6 D.D. None None of of t'e t'e a(ova(ove e B B   MM :.

:. T'e 'itoriT'e 'itori$al return *a$al return *ata for t'e at t'ree %earta for t'e at t'ree %ear for Co3an% A for Co3an% A to$4 i ,".# to$4 i ,".#6< 1=6< 1=66< 1=6< 1=6 an* t'at of t'e 3ar4et ortfolio i 1#6< 1#6 an* 1"6.

an* t'at of t'e 3ar4et ortfolio i 1#6< 1#6 an* 1"6. Cal$ulaCal$ulate t'e e@e$te* return for t'ete t'e e@e$te* return for t'e to$4 an* t'e 3ar4et ortfolio.

to$4 an* t'e 3ar4et ortfolio. A.

A. R_{RAAF26 RF26 RMMF} F 11))6 6 CC.. R_{RAAF1#6 RF1#6 RMMF1=6}F1=6 B.

B. R_{RAAF 1)6 RF 1)6 RMMF26} F26 D.D. None None of of t'e t'e a(ova(ove e B B   MM ::_{.. Mr. 7Mr. 7ilon re$ilon re$entl% (ou-entl% (ou-'t a $o3u't a $o3uter an* *e$iter an* *e$i*e* to inve*e* to invet !1##<##t !1##<### uin- an on# uin- an online tra*iline tra*in-}

n-a$$ount. e anal%e* t'e to$4 of five *ifferent $o3anie a follo&5 a$$ount. e anal%e* t'e to$4 of five *ifferent $o3anie a follo&5

E

E@@e $e $ttee* * RRe te tuur nr n SSttaan *n *aar * r * DDeevviia ta tiioonn R

R aann* * 8 8 PP''aarr33aa$$eeuuttii$$aall  11##66 11))66 7

7aall**een n AAuuttoo33oottiivve e 11""66 11==66 Y YMMOOC C IInn**uuttrriiaall 11??66 11""66 TTrruutt''iieell* * BBaann44  1166 1166 7 7aatteerrttoonne e TTiirree ))))66 112266 R

of 12 er$ent< . S. Treaur% (on* %iel* ? er$ent< an* t'e 3ar4et ri4 re3iu3 i = er$ent. of 12 er$ent< . S. Treaur% (on* %iel* ? er$ent< an* t'e 3ar4et ri4 re3iu3 i = er$ent. If Sun State &ant to re*u$e it re;uire* rate of return to 1" er$ent< &'at i t'e 3a@i3u3 If Sun State &ant to re*u$e it re;uire* rate of return to 1" er$ent< &'at i t'e 3a@i3u3 (eta $oeffi$ient t'e ne& *iviion $oul* 'ave> /D0

(eta $oeffi$ient t'e ne& *iviion $oul* 'ave> /D0

aa.. ))..)) **.. 11..""

((.. 11..## ee.. ))..##

$$.. 11..22 BBrrii--''aa33

Given t'e Correlation Coeffi$ient (et&een t'e Sto$4 an* Mar4et Portfolio Given t'e Correlation Coeffi$ient (et&een t'e Sto$4 an* Mar4et Portfolio +1.

+1. T'e $orrelatiT'e $orrelation $oeffi$ion $oeffi$ient (et&een to$4 A ent (et&een to$4 A an* t'e 3ar4et ortfolan* t'e 3ar4et ortfolio i L#.". io i L#.". T'e tan*ar*T'e tan*ar* *eviatio

*eviation of return of n of return of t'e to$4 i #6 an* t'at t'e to$4 i #6 an* t'at of t'e 3ar4et ortfolio i )#6. of t'e 3ar4et ortfolio i )#6. Cal$ulatCal$ulate t'ee t'e (eta of t'e to$4.

(eta of t'e to$4. A

A.. ##..: : CC.. 11..11

B

B.. 11..# # DD.. ##.." " B B   MM

+).

+). T'e $orrelatT'e $orrelation $oeffiion $oeffi$ient (et&ee$ient (et&een to$4 B an* t'e 3ar4et ortfn to$4 B an* t'e 3ar4et ortfolio i #.2. olio i #.2. T'e tan*arT'e tan*ar** *eviation of t'e to$4 B i =6 an* t'at of t'e 3ar4et i )#6.

*eviation of t'e to$4 B i =6 an* t'at of t'e 3ar4et i )#6. Cal$ulate t'e (eta of t'e to$4.Cal$ulate t'e (eta of t'e to$4. A

A.. 11..# # CC.. ##..22

B

B.. 11..+ + DD.. ##..? ? B B   MM

Given t'e itori$al No3inal Return for t'e Sto$4  Mar4et Portfolio Given t'e itori$al No3inal Return for t'e Sto$4  Mar4et Portfolio +.

+. itoriitori$al no3inal ret$al no3inal return for to$4 A iurn for to$4 A i 26< L1#6 an* L))6 26< L1#6 an* L))6. . T'e no3inaT'e no3inal return for t'el return for t'e 3ar4et ortfolio i L"6< L126 an* )+6.

3ar4et ortfolio i L"6< L126 an* )+6. Cal$ulate t'e (eta for to$4 A.Cal$ulate t'e (eta for to$4 A. A

A.. 11..""+ + CC.. 11..## B.

B. #.#."1 "1 D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM ++.

++. T'e t'ree %eaT'e t'ree %ear annual return for r annual return for to$4 B $o3eto$4 B $o3e out to (e #6< 1#6 an* )" out to (e #6< 1#6 an* )"6. 6. T'ree %earT'ree %ear annual return for t'e 3ar4et ortfolio are L"6< 126< )+6.

annual return for t'e 3ar4et ortfolio are L"6< 126< )+6. Cal$ulate t'e (eta for t'e to$4.Cal$ulate t'e (eta for t'e to$4. A

A.. 11.." " CC.. ##

B.

B. #.#.?+ ?+ D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM

Required Return Required Return

22_{.. .G. Penn%.G. Penn%a$4er i ina$4er i interete* iterete* in fin*in- t'n fin*in- t'e aroriate aroriate *i$ount re *i$ount rate for it neate for it ne& roe$t fo& roe$t forr} 3a4in- (lue< in4< an* %ello& &i*-et. T'e avera-e (eta of a -rou of $olore* &i*-et 3a4in- (lue< in4< an* %ello& &i*-et. T'e avera-e (eta of a -rou of $olore* &i*-et 3anufa$turer i 1.+ an* t'eir avera-e *e(t,e;uit% ratio i #.#. Penn%a$4er lan to 'ave a 3anufa$turer i 1.+ an* t'eir avera-e *e(t,e;uit% ratio i #.#. Penn%a$4er lan to 'ave a *e(t,e;uit% ratio of #.)#. If t'e ri4,free rate i "6 an* t'e e@e$te* ri4 re3iu3 on t'e *e(t,e;uit% ratio of #.)#. If t'e ri4,free rate i "6 an* t'e e@e$te* ri4 re3iu3 on t'e 3ar4et ortfolio i :6< &'at i t'e re;uire* return for t'e roe$t> /D0

3ar4et ortfolio i :6< &'at i t'e re;uire* return for t'e roe$t> /D0 A. A. :.?)6 :.?)6 C. C. 1".#261".#26 B. B. ?.#26 ?.#26 D. D. 1=.?)6 1=.?)6 Glei3Glei3 Expected Return Expected Return )2.

)2. Sto$4 A 'aSto$4 A 'a an e@e$te* return of 1#6 er %ear an* to$4 B 'a an e@e$te* return of )#6. an e@e$te* return of 1#6 er %ear an* to$4 B 'a an e@e$te* return of )#6. If ==6 of t'e fun* are invete* in to$4 B< &'at i t'e e@e$te* return on t'e ortfolio of to$4 If ==6 of t'e fun* are invete* in to$4 B< &'at i t'e e@e$te* return on t'e ortfolio of to$4 A an* to$4 B>

A an* to$4 B> A

A.. 11##6 6 CC.. 11++..==66

B.

B. )#)#6 6 D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM 12.

12. lori*a Co3lori*a Co3an% /C0 an* Minnan% /C0 an* Minneota Co3aeota Co3an% /MC0 are (ot' ervi$n% /MC0 are (ot' ervi$e $o3aniee $o3anie. . T'eirT'eir 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. If CIf C an* MC are $o3(ine* in a ortfolio &it' =#6 of t'e fun* invete* in ea$'< $al$ulate t'e an* MC are $o3(ine* in a ortfolio &it' =#6 of t'e fun* invete* in ea$'< $al$ulate t'e e@e$te* return on t'e ortfolio.

e@e$te* return on t'e ortfolio. A

A.. 11##6 6 CC.. 11""66

B.

B. 116 6 D.D. NoNone ne of of t't'e e a(a(ovove. e. B B   MM 1".

1". T'e 'itoriT'e 'itori$al return *ata for t'e at t're$al return *ata for t'e at t'ree %ear for Sto$4 B an* t'e to$4 3ar4et ore %ear for Sto$4 B an* t'e to$4 3ar4et ortfoliotfolio are5 Sto$4 B5, )+6< #6< )+6< Mar4et Portfolio5, 1#6< 1)6< )#6.

are5 Sto$4 B5, )+6< #6< )+6< Mar4et Portfolio5, 1#6< 1)6< )#6. Cal$ulaCal$ulate t'e e@e$te*te t'e e@e$te* return for Sto$4 B an* t'e 3ar4et ortfolio.

return for Sto$4 B an* t'e 3ar4et ortfolio. A.

A. StoSto$4 $4 B B 1"61"6< < MarMar4et 4et PorPortfoltfolio5 io5 1+6 1+6 C.C. Sto$Sto$4 4 B B )+6< )+6< MarMar4et 4et PortPortfolifolio5 o5 1)61)6 B.

B. StoSto$4 $4 B B 1+61+6< < MarMar4et 4et PorPortfoltfolio5 io5 1"6 1"6 D.D. None None of of t'e t'e a(ova(ove e B B   MM :.

:. T'e 'itoriT'e 'itori$al return *a$al return *ata for t'e at t'ree %earta for t'e at t'ree %ear for Co3an% A for Co3an% A to$4 i ,".# to$4 i ,".#6< 1=6< 1=66< 1=6< 1=6 an* t'at of t'e 3ar4et ortfolio i 1#6< 1#6 an* 1"6.

an* t'at of t'e 3ar4et ortfolio i 1#6< 1#6 an* 1"6. Cal$ulaCal$ulate t'e e@e$te* return for t'ete t'e e@e$te* return for t'e to$4 an* t'e 3ar4et ortfolio.

to$4 an* t'e 3ar4et ortfolio. A.

A. R_{RAAF26 RF26 RMMF} F 11))6 6 CC.. R_{RAAF1#6 RF1#6 RMMF1=6}F1=6 B.

B. R_{RAAF 1)6 RF 1)6 RMMF26} F26 D.D. None None of of t'e t'e a(ova(ove e B B   MM ::_{.. Mr. 7Mr. 7ilon re$ilon re$entl% (ou-entl% (ou-'t a $o3u't a $o3uter an* *e$iter an* *e$i*e* to inve*e* to invet !1##<##t !1##<### uin- an on# uin- an online tra*iline tra*in-}

n-a$$ount. e anal%e* t'e to$4 of five *ifferent $o3anie a follo&5 a$$ount. e anal%e* t'e to$4 of five *ifferent $o3anie a follo&5

E

E@@e $e $ttee* * RRe te tuur nr n SSttaan *n *aar * r * DDeevviia ta tiioonn R

R aann* * 8 8 PP''aarr33aa$$eeuuttii$$aall  11##66 11))66 7

7aall**een n AAuuttoo33oottiivve e 11""66 11==66 Y YMMOOC C IInn**uuttrriiaall 11??66 11""66 TTrruutt''iieell* * BBaann44  1166 1166 7 7aatteerrttoonne e TTiirree ))))66 112266 R

RPPCCPPAA<<AAIICCPPAA<<CCMMAACCIIAAEE88AAMMIINNAATTIIOONNJJEESSTTIIOONNSS PPaa--ee))ooff""""

M

MAANNAAGGEEMMEENNTTAADDVVIISSOORRYYSSEERRVVIICCEESS RRIISSKKSS

Mr. 7ilon *e$i*e to invet !=<### in R an* 8 P'ar3a$euti$al< !=<### in Trut'iel* Mr. 7ilon *e$i*e to invet !=<### in R an* 8 P'ar3a$euti$al< !=<### in Trut'iel* Ban4< an* !1#<### in ea$' of t'e ot'er t'ree to$4. Bae* on t'i infor3ation< &'at 'oul* Ban4< an* !1#<### in ea$' of t'e ot'er t'ree to$4. Bae* on t'i infor3ation< &'at 'oul* Mr. 7ilon au3e to (e 'i ortfolio e@e$te* return>

Mr. 7ilon au3e to (e 'i ortfolio e@e$te* return> A.

A. 2.?6 2.?6 C. C. 1+.2#61+.2#6

B.

B. 1.==6 1.==6 D. D. 1=."#6 1=."#6 Glei3Glei3

Risk-Adjusted Rate ! Return Risk-Adjusted Rate ! Return

1#

1#_{.. Dan*Dan*% Pro*u$t% Pro*u$t overa overall &ei-'tll &ei-'te* avera-e* avera-e e re;ure;uire* rate of return i 1# ire* rate of return i 1# er$er$ent. It %o-urent. It %o-urtt} *iviion i ri4ier t'an avera-e< it fre' ro*u$e *iviion 'a avera-e ri4< an* it intitutional *iviion i ri4ier t'an avera-e< it fre' ro*u$e *iviion 'a avera-e ri4< an* it intitutional foo* *iviion 'a (elo&,avera-e ri4. Dan*% a*ut for (ot' *iviional an* roe$t ri4 (% foo* *iviion 'a (elo&,avera-e ri4. Dan*% a*ut for (ot' *iviional an* roe$t ri4 (% a**in- or u(tra$tin- ) er$enta-e oint. T'u< t'e 3a@i3u3 a*ut3ent i + er$enta-e a**in- or u(tra$tin- ) er$enta-e oint. T'u< t'e 3a@i3u3 a*ut3ent i + er$enta-e oint. 7'at i t'e ri4,a*ute* re;uire* rate of return for a lo&,ri4 roe$t in t'e %o-urt oint. 7'at i t'e ri4,a*ute* re;uire* rate of return for a lo&,ri4 roe$t in t'e %o-urt *iviion> /E0 *iviion> /E0 aa.. ""66 **.. 11))66 ((.. 2266 ee.. 11++66 $$.. 11##66 BBrrii--''aa33 Prt!"i #ariance Prt!"i #ariance 1?.

1?. T'e 'itoriT'e 'itori$al return *ata for t'e at t'ree %ea$al return *ata for t'e at t'ree %ear for Sto$4 B an* t'e to$4 3ar4et orr for Sto$4 B an* t'e to$4 3ar4et ortfoliotfolio are5 Sto$4 B5, )+6< #6< )+6< Mar4et Portfoli

are5 Sto$4 B5, )+6< #6< )+6< Mar4et Portfolio5, 1#6< 1)6< )#6. o5, 1#6< 1)6< )#6. Cal$ulaCal$ulate t'e varian$e inte t'e varian$e in t'e 3ar4et.

t'e 3ar4et. A

A.. 11::) ) CC.. 11))22

B.

B. )2 )2 D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM 1:.

1:. lori*a Co3lori*a Co3an% /C0 an* Minnan% /C0 an* Minneota Co3aneota Co3an% /MC0 are (ot' ervi$% /MC0 are (ot' ervi$e $o3aniee $o3anie. . T'eirT'eir 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. If CIf C an* MC are $o3(ine* in a ortfolio &it' =#6 of t'e fun* invete* in ea$'< &'at i t'e an* MC are $o3(ine* in a ortfolio &it' =#6 of t'e fun* invete* in ea$'< &'at i t'e varian$e of t'e ortfolio &it' =#6 of t'e fun* invete* in C an* =#6 in MC /aro@i3atel%0> varian$e of t'e ortfolio &it' =#6 of t'e fun* invete* in C an* =#6 in MC /aro@i3atel%0> A

A.. ))##2 2 CC.. 112222

B.

B. ))= = D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM

Prt!"i $tandard %e&iatin Prt!"i $tandard %e&iatin

11

11_{.. 7'at i t'e 7'at i t'e tan*ar* *evtan*ar* *eviation of iation of t'e follo&t'e follo&in- t&o,in- t&o,to$4 ortfto$4 ortfolio> /VDolio> /VD00} 7

7eeii--''ttiinn-- SSttaann**aarr* * DDeevviiaattiioonn CCoorrrreellaattiioonn S Sttoo$$44AA ""##66 111166 ..?? S Sttoo$$44BB ++##66 11++66 A. A. 11.)=6 11.)=6 C. C. 1).=#61).=#6 B. B. 1).)#6 1).)#6 D. D. 1)".""6 1)".""6 CM CM Sa3le Sa3le J),:J),: #.

#. Sto$4 8 'a a tan*ar* *eviaSto$4 8 'a a tan*ar* *eviation of return of 1#6. tion of return of 1#6. Sto$4 Y 'a a tan*ar* *evSto$4 Y 'a a tan*ar* *eviation of returniation of return of )#6. T'e $orrelatio

of )#6. T'e $orrelation $oeffi$ien $oeffi$ient (et&een to$4 i #.=. nt (et&een to$4 i #.=. If %ou invet "#6 of t'e fun* inIf %ou invet "#6 of t'e fun* in to$4 8 an* +#6 in to$4 Y< &'at i t'e tan*ar* *eviation of a ortfolio>

to$4 8 an* +#6 in to$4 Y< &'at i t'e tan*ar* *eviation of a ortfolio> A

A.. 11##6 6 CC.. 11))..))66

B.

B. )#)#6 6 D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM )#.

)#. lori*a Co3lori*a Co3an% /C0 an* Minnan% /C0 an* Minneota Co3aeota Co3an% /MC0 are (ot' ervi$n% /MC0 are (ot' ervi$e $o3aniee $o3anie. . T'eirT'eir 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. If CIf C an* MC are $o3(ine* in a ortfolio &it' =#6 of t'e fun* invete* in ea$'< &'at i t'e an* MC are $o3(ine* in a ortfolio &it' =#6 of t'e fun* invete* in ea$'< &'at i t'e tan*ar* *eviation of t'e ortfolio &it' =#6 of t'e fun* invete* in C an* =#6 in MC> tan*ar* *eviation of t'e ortfolio &it' =#6 of t'e fun* invete* in C an* =#6 in MC> A

A.. 11++..++6 6 CC.. 1166

B.

B. 12126 6 D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM

Mini'u' Prt!"i Risk Mini'u' Prt!"i Risk

Proortion of Invet3ent Proortion of Invet3ent =.

=. StoSto$4 A 'a an e@$4 A 'a an e@e$te$te* reture* return of )#6 an* Sto$n of )#6 an* Sto$4 B 'a an e@e$t4 B 'a an e@e$te* retue* return of 1)6. rn of 1)6. T'eT'e ri4ine

ri4ine of to$4 A a 3eaure* (% t'e varian$e i t'ree ti3e t'at of to$4 B.  of to$4 A a 3eaure* (% t'e varian$e i t'ree ti3e t'at of to$4 B. If t'eIf t'e $orrelat

$orrelation $oeffi$ienion $oeffi$ient (et&een t'e t (et&een t'e t&o to$4 i ero< &'at t&o to$4 i ero< &'at roortiroortion of on of invet3invet3ent in ent in ea$'ea$' to$4 -ive t'e 3ini3u3 ortfolio varian$e /3ini3u3 ri40>

to$4 -ive t'e 3ini3u3 ortfolio varian$e /3ini3u3 ri40> A.

A. =#6 in S=#6 in Sto$4 to$4 A an* =A an* =#6 in St#6 in Sto$4 Bo$4 B B.

B. )=6 in S)=6 in Sto$4 to$4 A an* ?A an* ?=6 in St=6 in Sto$4 Bo$4 B C.

C. ?=6 in S?=6 in Sto$4 to$4 A an* )A an* )=6 in St=6 in Sto$4 Bo$4 B D.

D. NoNone one of t'f t'e a(e a(ovovee B  MB  M

?.

?. StoSto$4 8 'a an e@e$$4 8 'a an e@e$te* retute* return of )#6 an* Storn of )#6 an* Sto$4 Y 'a an e@e$4 Y 'a an e@e$te$te* retur* return of 1#6. n of 1#6. T'eT'e ri4ine of Sto$4 8 a 3eaure* (% t'e tan*ar* *eviation of return i t&i$e t'at of Sto$4 Y. ri4ine of Sto$4 8 a 3eaure* (% t'e tan*ar* *eviation of return i t&i$e t'at of Sto$4 Y. If t'e $orrelation $oeffi$ient (et&een t'e t&o to$4 i ero< &'at roortion of t'e invet3ent If t'e $orrelation $oeffi$ient (et&een t'e t&o to$4 i ero< &'at roortion of t'e invet3ent in ea$' to$4 -ive t'e leat ortfolio ri4 /3ini3u3 ortfolio ri40>

in ea$' to$4 -ive t'e leat ortfolio ri4 /3ini3u3 ortfolio ri40> A.

A. =#=#6 6 in in 8 8 an* an* =#6 =#6 in in Y Y C.C. )#6 )#6 in in 8 8 an* an* 2#2#6 6 in in YY B.

B. )=)=6 6 in in 8 8 an* an* ?=6 ?=6 in in Y Y D.D. NonNone e of of t't'e e a(oa(ove ve B B   MM

Mini'u' #ariance Prt!"i Mini'u' #ariance Prt!"i

Proortion of Invet3ent Proortion of Invet3ent )1.

)1. lori*a Co3lori*a Co3an% /C0 an* Minnan% /C0 an* Minneota Co3aeota Co3an% /MC0 are (ot' ervi$n% /MC0 are (ot' ervi$e $o3aniee $o3anie. . T'eirT'eir 'itori$al return for t'e at t'ree %ear are5 C5

'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. ,1#6<1=6< )=6H MC5 1#6< "6< )6. 7'at7'at i t'e roortion of fun* to (e invete* in C an* MC to a$'ieve t'e 3ini3u3 varian$e i t'e roortion of fun* to (e invete* in C an* MC to a$'ieve t'e 3ini3u3 varian$e ortfolio>

ortfolio> R

Mr. 7ilon *e$i*e to invet !=<### in R an* 8 P'ar3a$euti$al< !=<### in Trut'iel* Mr. 7ilon *e$i*e to invet !=<### in R an* 8 P'ar3a$euti$al< !=<### in Trut'iel* Ban4< an* !1#<### in ea$' of t'e ot'er t'ree to$4. Bae* on t'i infor3ation< &'at 'oul* Ban4< an* !1#<### in ea$' of t'e ot'er t'ree to$4. Bae* on t'i infor3ation< &'at 'oul* Mr. 7ilon au3e to (e 'i ortfolio e@e$te* return>

Mr. 7ilon au3e to (e 'i ortfolio e@e$te* return> A.

A. 2.?6 2.?6 C. C. 1+.2#61+.2#6

B.

B. 1.==6 1.==6 D. D. 1=."#6 1=."#6 Glei3Glei3

Risk-Adjusted Rate ! Return Risk-Adjusted Rate ! Return

1#

1#_{.. Dan*Dan*% Pro*u$t% Pro*u$t overa overall &ei-'tll &ei-'te* avera-e* avera-e e re;ure;uire* rate of return i 1# ire* rate of return i 1# er$er$ent. It %o-urent. It %o-urtt} *iviion i ri4ier t'an avera-e< it fre' ro*u$e *iviion 'a avera-e ri4< an* it intitutional *iviion i ri4ier t'an avera-e< it fre' ro*u$e *iviion 'a avera-e ri4< an* it intitutional foo* *iviion 'a (elo&,avera-e ri4. Dan*% a*ut for (ot' *iviional an* roe$t ri4 (% foo* *iviion 'a (elo&,avera-e ri4. Dan*% a*ut for (ot' *iviional an* roe$t ri4 (% a**in- or u(tra$tin- ) er$enta-e oint. T'u< t'e 3a@i3u3 a*ut3ent i + er$enta-e a**in- or u(tra$tin- ) er$enta-e oint. T'u< t'e 3a@i3u3 a*ut3ent i + er$enta-e oint. 7'at i t'e ri4,a*ute* re;uire* rate of return for a lo&,ri4 roe$t in t'e %o-urt oint. 7'at i t'e ri4,a*ute* re;uire* rate of return for a lo&,ri4 roe$t in t'e %o-urt *iviion> /E0 *iviion> /E0 aa.. ""66 **.. 11))66 ((.. 2266 ee.. 11++66 $$.. 11##66 BBrrii--''aa33 Prt!"i #ariance Prt!"i #ariance 1?.

1?. T'e 'itoriT'e 'itori$al return *ata for t'e at t'ree %ea$al return *ata for t'e at t'ree %ear for Sto$4 B an* t'e to$4 3ar4et orr for Sto$4 B an* t'e to$4 3ar4et ortfoliotfolio are5 Sto$4 B5, )+6< #6< )+6< Mar4et Portfoli

are5 Sto$4 B5, )+6< #6< )+6< Mar4et Portfolio5, 1#6< 1)6< )#6. o5, 1#6< 1)6< )#6. Cal$ulaCal$ulate t'e varian$e inte t'e varian$e in t'e 3ar4et.

t'e 3ar4et. A

A.. 11::) ) CC.. 11))22

B.

B. )2 )2 D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM 1:.

1:. lori*a Co3lori*a Co3an% /C0 an* Minnan% /C0 an* Minneota Co3aneota Co3an% /MC0 are (ot' ervi$% /MC0 are (ot' ervi$e $o3aniee $o3anie. . T'eirT'eir 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. If CIf C an* MC are $o3(ine* in a ortfolio &it' =#6 of t'e fun* invete* in ea$'< &'at i t'e an* MC are $o3(ine* in a ortfolio &it' =#6 of t'e fun* invete* in ea$'< &'at i t'e varian$e of t'e ortfolio &it' =#6 of t'e fun* invete* in C an* =#6 in MC /aro@i3atel%0> varian$e of t'e ortfolio &it' =#6 of t'e fun* invete* in C an* =#6 in MC /aro@i3atel%0> A

A.. ))##2 2 CC.. 112222

B.

B. ))= = D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM

Prt!"i $tandard %e&iatin Prt!"i $tandard %e&iatin

11

11_{.. 7'at i t'e 7'at i t'e tan*ar* *evtan*ar* *eviation of iation of t'e follo&t'e follo&in- t&o,in- t&o,to$4 ortfto$4 ortfolio> /VDolio> /VD00} 7

7eeii--''ttiinn-- SSttaann**aarr* * DDeevviiaattiioonn CCoorrrreellaattiioonn S Sttoo$$44AA ""##66 111166 ..?? S Sttoo$$44BB ++##66 11++66 A. A. 11.)=6 11.)=6 C. C. 1).=#61).=#6 B. B. 1).)#6 1).)#6 D. D. 1)".""6 1)".""6 CM CM Sa3le Sa3le J),:J),: #.

#. Sto$4 8 'a a tan*ar* *eviaSto$4 8 'a a tan*ar* *eviation of return of 1#6. tion of return of 1#6. Sto$4 Y 'a a tan*ar* *evSto$4 Y 'a a tan*ar* *eviation of returniation of return of )#6. T'e $orrelatio

of )#6. T'e $orrelation $oeffi$ien $oeffi$ient (et&een to$4 i #.=. nt (et&een to$4 i #.=. If %ou invet "#6 of t'e fun* inIf %ou invet "#6 of t'e fun* in to$4 8 an* +#6 in to$4 Y< &'at i t'e tan*ar* *eviation of a ortfolio>

to$4 8 an* +#6 in to$4 Y< &'at i t'e tan*ar* *eviation of a ortfolio> A

A.. 11##6 6 CC.. 11))..))66

B.

B. )#)#6 6 D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM )#.

)#. lori*a Co3lori*a Co3an% /C0 an* Minnan% /C0 an* Minneota Co3aeota Co3an% /MC0 are (ot' ervi$n% /MC0 are (ot' ervi$e $o3aniee $o3anie. . T'eirT'eir 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. If CIf C an* MC are $o3(ine* in a ortfolio &it' =#6 of t'e fun* invete* in ea$'< &'at i t'e an* MC are $o3(ine* in a ortfolio &it' =#6 of t'e fun* invete* in ea$'< &'at i t'e tan*ar* *eviation of t'e ortfolio &it' =#6 of t'e fun* invete* in C an* =#6 in MC> tan*ar* *eviation of t'e ortfolio &it' =#6 of t'e fun* invete* in C an* =#6 in MC> A

A.. 11++..++6 6 CC.. 1166

B.

B. 12126 6 D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM

Mini'u' Prt!"i Risk Mini'u' Prt!"i Risk

Proortion of Invet3ent Proortion of Invet3ent =.

=. StoSto$4 A 'a an e@$4 A 'a an e@e$te$te* reture* return of )#6 an* Sto$n of )#6 an* Sto$4 B 'a an e@e$t4 B 'a an e@e$te* retue* return of 1)6. rn of 1)6. T'eT'e ri4ine

ri4ine of to$4 A a 3eaure* (% t'e varian$e i t'ree ti3e t'at of to$4 B.  of to$4 A a 3eaure* (% t'e varian$e i t'ree ti3e t'at of to$4 B. If t'eIf t'e $orrelat

$orrelation $oeffi$ienion $oeffi$ient (et&een t'e t (et&een t'e t&o to$4 i ero< &'at t&o to$4 i ero< &'at roortiroortion of on of invet3invet3ent in ent in ea$'ea$' to$4 -ive t'e 3ini3u3 ortfolio varian$e /3ini3u3 ri40>

to$4 -ive t'e 3ini3u3 ortfolio varian$e /3ini3u3 ri40> A.

A. =#6 in S=#6 in Sto$4 to$4 A an* =A an* =#6 in St#6 in Sto$4 Bo$4 B B.

B. )=6 in S)=6 in Sto$4 to$4 A an* ?A an* ?=6 in St=6 in Sto$4 Bo$4 B C.

C. ?=6 in S?=6 in Sto$4 to$4 A an* )A an* )=6 in St=6 in Sto$4 Bo$4 B D.

D. NoNone one of t'f t'e a(e a(ovovee B  MB  M

?.

?. StoSto$4 8 'a an e@e$$4 8 'a an e@e$te* retute* return of )#6 an* Storn of )#6 an* Sto$4 Y 'a an e@e$4 Y 'a an e@e$te$te* retur* return of 1#6. n of 1#6. T'eT'e ri4ine of Sto$4 8 a 3eaure* (% t'e tan*ar* *eviation of return i t&i$e t'at of Sto$4 Y. ri4ine of Sto$4 8 a 3eaure* (% t'e tan*ar* *eviation of return i t&i$e t'at of Sto$4 Y. If t'e $orrelation $oeffi$ient (et&een t'e t&o to$4 i ero< &'at roortion of t'e invet3ent If t'e $orrelation $oeffi$ient (et&een t'e t&o to$4 i ero< &'at roortion of t'e invet3ent in ea$' to$4 -ive t'e leat ortfolio ri4 /3ini3u3 ortfolio ri40>

in ea$' to$4 -ive t'e leat ortfolio ri4 /3ini3u3 ortfolio ri40> A.

A. =#=#6 6 in in 8 8 an* an* =#6 =#6 in in Y Y C.C. )#6 )#6 in in 8 8 an* an* 2#2#6 6 in in YY B.

B. )=)=6 6 in in 8 8 an* an* ?=6 ?=6 in in Y Y D.D. NonNone e of of t't'e e a(oa(ove ve B B   MM

Mini'u' #ariance Prt!"i Mini'u' #ariance Prt!"i

Proortion of Invet3ent Proortion of Invet3ent )1.

)1. lori*a Co3lori*a Co3an% /C0 an* Minnan% /C0 an* Minneota Co3aeota Co3an% /MC0 are (ot' ervi$n% /MC0 are (ot' ervi$e $o3aniee $o3anie. . T'eirT'eir 'itori$al return for t'e at t'ree %ear are5 C5

'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. ,1#6<1=6< )=6H MC5 1#6< "6< )6. 7'at7'at i t'e roortion of fun* to (e invete* in C an* MC to a$'ieve t'e 3ini3u3 varian$e i t'e roortion of fun* to (e invete* in C an* MC to a$'ieve t'e 3ini3u3 varian$e ortfolio>

ortfolio> R

RPPCCPPAA<<AAIICCPPAA<<CCMMAACCIIAAEE88AAMMIINNAATTIIOONNJJEESSTTIIOONNSS PPaa--eeooff""""

M

MAANNAAGGEEMMEENNTTAADDVVIISSOORRYYSSEERRVVIICCEESS RRIISSKKSS

A.

A. CC5 5 =#6 =#6 MCMC5 5 =#6 =#6 C.C. CC5 5 )#6 )#6 MCMC5 5 2#62#6 B.

B. CC5 5 )=6 )=6 MCMC5 5 ?=6 ?=6 D.D. NonNone e of of t'e t'e a(oa(ove ve B B   MM Varian$e

Varian$e ).

). lori*a Co3lori*a Co3an% /C0 an* Minnan% /C0 an* Minneota Co3aneota Co3an% /MC0 are (ot' ervi$% /MC0 are (ot' ervi$e $o3aniee $o3anie. . T'eirT'eir 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H

'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. MC5 1#6< "6< )6. 7'at7'at i t'e varian$e of t'e 3ini3u3 varian$e ortfolio of C an* MC>

i t'e varian$e of t'e 3ini3u3 varian$e ortfolio of C an* MC> A

A.. 11222 2 CC.. ))##22

B.

B. 1:1:" " D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM E@e$te* Return

E@e$te* Return ".

". Sto$Sto$4 A 'a an e@4 A 'a an e@e$te$te* reture* return of )#6 an* Sto$n of )#6 an* Sto$4 B 'a an e@e$t4 B 'a an e@e$te* retue* return of 1)6. rn of 1)6. T'eT'e ri4ine

ri4ine of Sto$4 A a 3eau of Sto$4 A a 3eaure* (% t'e varian$e i t'ree ti3e t'at of Sto$re* (% t'e varian$e i t'ree ti3e t'at of Sto$4 B. 4 B. If t'eIf t'e $orrelation $oeffi$ient (et&een t'e t&o to$4 i ero< &'at i t'e e@e$te* return on t'e $orrelation $oeffi$ient (et&een t'e t&o to$4 i ero< &'at i t'e e@e$te* return on t'e 3ini3u3 varian$e ortfolio>

3ini3u3 varian$e ortfolio> A

A.. 11""6 6 CC.. 11))66

B

B.. 11++6 6 DD.. ))##66 B  MB  M

2.

2. Sto$Sto$4 8 'a an e@e$4 8 'a an e@e$te* rette* return of )#6 anurn of )#6 an* to$4 Y 'a* to$4 Y 'a 1#6.  1#6. T'e riT'e ri4in4ine of Ste of Sto$4 8 ao$4 8 a 3eaure* (% t'e tan*ar* *eviat

3eaure* (% t'e tan*ar* *eviation of t'e return i t&i$e t'at of ion of t'e return i t&i$e t'at of Sto$4 YSto$4 Y. . If t'e $orrelationIf t'e $orrelation $oeffi$ient (et&een t'e t&o to$4 i ero< &'at i t'e e@e$te* return on t'e ortfolio &it' $oeffi$ient (et&een t'e t&o to$4 i ero< &'at i t'e e@e$te* return on t'e ortfolio &it' 3ini3u3 ri4 /3ini3u3 varian$e ortfolio0>

3ini3u3 ri4 /3ini3u3 varian$e ortfolio0> A

A.. ))##6 6 CC.. 11))66

B

B.. 11==6 6 DD.. 11##6 6 B B   MM

)).

)). lori*a Co3lori*a Co3an% /C0 an* Minnan% /C0 an* Minneota Co3aneota Co3an% /MC0 are (ot' ervi$% /MC0 are (ot' ervi$e $o3aniee $o3anie. . T'eirT'eir 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H

'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. MC5 1#6< "6< )6. 7'at7'at i t'e e@e$te* return on t'e 3ini3u3 varian$e ortfolio>

i t'e e@e$te* return on t'e 3ini3u3 varian$e ortfolio> A

A.. 11++..226 6 CC.. 11##66

B.

B. 1"1"6 6 D.D. NoNone ne of of t't'e e a(a(ovove. e. B B   MM

$tck ( Market Prt!"i $tck ( Market Prt!"i

.

. StanStan*ar* a*ar* an* Pon* Poor or =## In=## In*e@ i*e@ i a5 a5 A.

A. PorPortfoltfolio io of of $o3$o33on 3on to$to$4 4 C.C. PortPortfolifolio o of of -ove-overn3rn3ent ent (on*(on* B.

B. PorPortfoltfolio io of of $or$ororatorate e (on*(on*  D.D. A A an* an* B B a(ova(ove e B B   MM

Mar4et Varian$e Mar4et Varian$e 1#.

1#. T'e 'itori$T'e 'itori$al return *ata for t'e at t'ree %ear for Co3anal return *ata for t'e at t'ree %ear for Co3an% A to$4 i ,".#6< 1=6% A to$4 i ,".#6< 1=6< 1=6< 1=6 an* t'at of t'e 3ar4et ortfolio i 1#6< 1#6

an* t'at of t'e 3ar4et ortfolio i 1#6< 1#6 an* 1"6. an* 1"6. Cal$ulate t'e varian$e of t'e 3ar4et.Cal$ulate t'e varian$e of t'e 3ar4et. A

A.. 2 2 CC.. 11++??

B.

B. 1) 1) D.D. NoNone ne of of t't'e e a(a(ovove. e. B B   MM Varian$e *ue to Mar4et Ri4

Varian$e *ue to Mar4et Ri4 )=.

)=. TTele$o3ele$o3ute Co3an% variute Co3an% varian$e of return i +##. an$e of return i +##. If t'e R,;uare* of t'e re-reioIf t'e R,;uare* of t'e re-reion (et&eenn (et&een t'e $o3an% return an* t'e 3ar4et return i #."< $al$ulate t'e varian$e t'at i *ue to t'e t'e $o3an% return an* t'e 3ar4et return i #."< $al$ulate t'e varian$e t'at i *ue to t'e 3ar4et ri4 for t'e $o3an%.

3ar4et ri4 for t'e $o3an%. A

A.. ))++# # CC.. ""####

B.

B. 1"1"# # D.D. MoMore re ininfofor3r3atiation on i i nenee*ee*e* * B B   MM Covarian$e

Covarian$e 11.

11. T'e 'itori$T'e 'itori$al return *ata for t'e at t'ree %ear for Co3anal return *ata for t'e at t'ree %ear for Co3an% A to$4 i ,".#6< 1=6% A to$4 i ,".#6< 1=6< 1=6< 1=6 an* t'at of t'e 3ar4et ortfolio i

an* t'at of t'e 3ar4et ortfolio i 1#6< 1#6 an* 1"6. 1#6< 1#6 an* 1"6. Cal$ulate t'e $ovarian$e (et&een t'eCal$ulate t'e $ovarian$e (et&een t'e to$4 return an* t'e 3ar4et return.

to$4 return an* t'e 3ar4et return. A

A.. ))1 1 CC.. 11++

B.

B. +) +) D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM 12.

12. T'e 'itoriT'e 'itori$al return *ata for t'e at t're$al return *ata for t'e at t'ree %ear for Sto$4 B an* t'e to$4 3ar4et ore %ear for Sto$4 B an* t'e to$4 3ar4et ortfoliotfolio are5 Sto$4 B5, )+6< #6< )+6< Mar4et

are5 Sto$4 B5, )+6< #6< )+6< Mar4et Portfolio5, 1#6< 1)6< )#6. Portfolio5, 1#6< 1)6< )#6. Cal$ulate t'e $ovarian$e ofCal$ulate t'e $ovarian$e of return (et&een Sto$4 B an* t'e 3ar4et ortfolio.

return (et&een Sto$4 B an* t'e 3ar4et ortfolio. A

A.. ))+ + CC.. ))::))

B

B.. ))22 DD. N. Noonne e oof f tt''e e aa((oovve e B B   MM Sto$4 Beta

Sto$4 Beta 1).

1). T'e 'itori$T'e 'itori$al return *ata for t'e at t'ree %ear for Co3anal return *ata for t'e at t'ree %ear for Co3an% A to$4 i ,".#6< 1=6% A to$4 i ,".#6< 1=6< 1=6< 1=6 an* t'at of t'e 3ar4et ortfolio i 1#6< 1#6

an* t'at of t'e 3ar4et ortfolio i 1#6< 1#6 an* 1"6. an* 1"6. Cal$ulate t'e (eta for Sto$4 A.Cal$ulate t'e (eta for Sto$4 A. A

A.. 11..# # CC.. ##..==??

B.

B. 1.1.?= ?= D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM 1:.

1:. T'e 'itoriT'e 'itori$al return *ata for t'e at t're$al return *ata for t'e at t'ree %ear for Sto$4 B an* t'e to$4 3ar4et ore %ear for Sto$4 B an* t'e to$4 3ar4et ortfoliotfolio are5 Sto$4 B5, )+6< #6< )+6< Mar4et Portfol

are5 Sto$4 B5, )+6< #6< )+6< Mar4et Portfolio5, 1#6< 1)6< )#6. io5, 1#6< 1)6< )#6. Cal$ulaCal$ulate t'e (eta forte t'e (eta for Sto$4 B.

Sto$4 B. A

A.. 11..# # CC.. ##..11))==

B.

B. #.#.2" 2" D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM

R

A.

A. CC5 5 =#6 =#6 MCMC5 5 =#6 =#6 C.C. CC5 5 )#6 )#6 MCMC5 5 2#62#6 B.

B. CC5 5 )=6 )=6 MCMC5 5 ?=6 ?=6 D.D. NonNone e of of t'e t'e a(oa(ove ve B B   MM Varian$e

Varian$e ).

). lori*a Co3lori*a Co3an% /C0 an* Minnan% /C0 an* Minneota Co3aneota Co3an% /MC0 are (ot' ervi$% /MC0 are (ot' ervi$e $o3aniee $o3anie. . T'eirT'eir 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H

'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. MC5 1#6< "6< )6. 7'at7'at i t'e varian$e of t'e 3ini3u3 varian$e ortfolio of C an* MC>

i t'e varian$e of t'e 3ini3u3 varian$e ortfolio of C an* MC> A

A.. 11222 2 CC.. ))##22

B.

B. 1:1:" " D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM E@e$te* Return

E@e$te* Return ".

". Sto$Sto$4 A 'a an e@4 A 'a an e@e$te$te* reture* return of )#6 an* Sto$n of )#6 an* Sto$4 B 'a an e@e$t4 B 'a an e@e$te* retue* return of 1)6. rn of 1)6. T'eT'e ri4ine

ri4ine of Sto$4 A a 3eau of Sto$4 A a 3eaure* (% t'e varian$e i t'ree ti3e t'at of Sto$re* (% t'e varian$e i t'ree ti3e t'at of Sto$4 B. 4 B. If t'eIf t'e $orrelation $oeffi$ient (et&een t'e t&o to$4 i ero< &'at i t'e e@e$te* return on t'e $orrelation $oeffi$ient (et&een t'e t&o to$4 i ero< &'at i t'e e@e$te* return on t'e 3ini3u3 varian$e ortfolio>

3ini3u3 varian$e ortfolio> A

A.. 11""6 6 CC.. 11))66

B

B.. 11++6 6 DD.. ))##66 B  MB  M

2.

2. Sto$Sto$4 8 'a an e@e$4 8 'a an e@e$te* rette* return of )#6 anurn of )#6 an* to$4 Y 'a* to$4 Y 'a 1#6.  1#6. T'e riT'e ri4in4ine of Ste of Sto$4 8 ao$4 8 a 3eaure* (% t'e tan*ar* *eviat

3eaure* (% t'e tan*ar* *eviation of t'e return i t&i$e t'at of ion of t'e return i t&i$e t'at of Sto$4 YSto$4 Y. . If t'e $orrelationIf t'e $orrelation $oeffi$ient (et&een t'e t&o to$4 i ero< &'at i t'e e@e$te* return on t'e ortfolio &it' $oeffi$ient (et&een t'e t&o to$4 i ero< &'at i t'e e@e$te* return on t'e ortfolio &it' 3ini3u3 ri4 /3ini3u3 varian$e ortfolio0>

3ini3u3 ri4 /3ini3u3 varian$e ortfolio0> A

A.. ))##6 6 CC.. 11))66

B

B.. 11==6 6 DD.. 11##6 6 B B   MM

)).

)). lori*a Co3lori*a Co3an% /C0 an* Minnan% /C0 an* Minneota Co3aneota Co3an% /MC0 are (ot' ervi$% /MC0 are (ot' ervi$e $o3aniee $o3anie. . T'eirT'eir 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H

'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. MC5 1#6< "6< )6. 7'at7'at i t'e e@e$te* return on t'e 3ini3u3 varian$e ortfolio>

i t'e e@e$te* return on t'e 3ini3u3 varian$e ortfolio> A

A.. 11++..226 6 CC.. 11##66

B.

B. 1"1"6 6 D.D. NoNone ne of of t't'e e a(a(ovove. e. B B   MM

$tck ( Market Prt!"i $tck ( Market Prt!"i

.

. StanStan*ar* a*ar* an* Pon* Poor or =## In=## In*e@ i*e@ i a5 a5 A.

A. PorPortfoltfolio io of of $o3$o33on 3on to$to$4 4 C.C. PortPortfolifolio o of of -ove-overn3rn3ent ent (on*(on* B.

B. PorPortfoltfolio io of of $or$ororatorate e (on*(on*  D.D. A A an* an* B B a(ova(ove e B B   MM

Mar4et Varian$e Mar4et Varian$e 1#.

1#. T'e 'itori$T'e 'itori$al return *ata for t'e at t'ree %ear for Co3anal return *ata for t'e at t'ree %ear for Co3an% A to$4 i ,".#6< 1=6% A to$4 i ,".#6< 1=6< 1=6< 1=6 an* t'at of t'e 3ar4et ortfolio i 1#6< 1#6

an* t'at of t'e 3ar4et ortfolio i 1#6< 1#6 an* 1"6. an* 1"6. Cal$ulate t'e varian$e of t'e 3ar4et.Cal$ulate t'e varian$e of t'e 3ar4et. A

A.. 2 2 CC.. 11++??

B.

B. 1) 1) D.D. NoNone ne of of t't'e e a(a(ovove. e. B B   MM Varian$e *ue to Mar4et Ri4

Varian$e *ue to Mar4et Ri4 )=.

)=. TTele$o3ele$o3ute Co3an% variute Co3an% varian$e of return i +##. an$e of return i +##. If t'e R,;uare* of t'e re-reioIf t'e R,;uare* of t'e re-reion (et&eenn (et&een t'e $o3an% return an* t'e 3ar4et return i #."< $al$ulate t'e varian$e t'at i *ue to t'e t'e $o3an% return an* t'e 3ar4et return i #."< $al$ulate t'e varian$e t'at i *ue to t'e 3ar4et ri4 for t'e $o3an%.

3ar4et ri4 for t'e $o3an%. A

A.. ))++# # CC.. ""####

B.

B. 1"1"# # D.D. MoMore re ininfofor3r3atiation on i i nenee*ee*e* * B B   MM Covarian$e

Covarian$e 11.

11. T'e 'itori$T'e 'itori$al return *ata for t'e at t'ree %ear for Co3anal return *ata for t'e at t'ree %ear for Co3an% A to$4 i ,".#6< 1=6% A to$4 i ,".#6< 1=6< 1=6< 1=6 an* t'at of t'e 3ar4et ortfolio i

an* t'at of t'e 3ar4et ortfolio i 1#6< 1#6 an* 1"6. 1#6< 1#6 an* 1"6. Cal$ulate t'e $ovarian$e (et&een t'eCal$ulate t'e $ovarian$e (et&een t'e to$4 return an* t'e 3ar4et return.

to$4 return an* t'e 3ar4et return. A

A.. ))1 1 CC.. 11++

B.

B. +) +) D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM 12.

12. T'e 'itoriT'e 'itori$al return *ata for t'e at t're$al return *ata for t'e at t'ree %ear for Sto$4 B an* t'e to$4 3ar4et ore %ear for Sto$4 B an* t'e to$4 3ar4et ortfoliotfolio are5 Sto$4 B5, )+6< #6< )+6< Mar4et

are5 Sto$4 B5, )+6< #6< )+6< Mar4et Portfolio5, 1#6< 1)6< )#6. Portfolio5, 1#6< 1)6< )#6. Cal$ulate t'e $ovarian$e ofCal$ulate t'e $ovarian$e of return (et&een Sto$4 B an* t'e 3ar4et ortfolio.

return (et&een Sto$4 B an* t'e 3ar4et ortfolio. A

A.. ))+ + CC.. ))::))

B

B.. ))22 DD. N. Noonne e oof f tt''e e aa((oovve e B B   MM Sto$4 Beta

Sto$4 Beta 1).

1). T'e 'itori$T'e 'itori$al return *ata for t'e at t'ree %ear for Co3anal return *ata for t'e at t'ree %ear for Co3an% A to$4 i ,".#6< 1=6% A to$4 i ,".#6< 1=6< 1=6< 1=6 an* t'at of t'e 3ar4et ortfolio i 1#6< 1#6

an* t'at of t'e 3ar4et ortfolio i 1#6< 1#6 an* 1"6. an* 1"6. Cal$ulate t'e (eta for Sto$4 A.Cal$ulate t'e (eta for Sto$4 A. A

A.. 11..# # CC.. ##..==??

B.

B. 1.1.?= ?= D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM 1:.

1:. T'e 'itoriT'e 'itori$al return *ata for t'e at t're$al return *ata for t'e at t'ree %ear for Sto$4 B an* t'e to$4 3ar4et ore %ear for Sto$4 B an* t'e to$4 3ar4et ortfoliotfolio are5 Sto$4 B5, )+6< #6< )+6< Mar4et Portfol

are5 Sto$4 B5, )+6< #6< )+6< Mar4et Portfolio5, 1#6< 1)6< )#6. io5, 1#6< 1)6< )#6. Cal$ulaCal$ulate t'e (eta forte t'e (eta for Sto$4 B.

Sto$4 B. A

A.. 11..# # CC.. ##..11))==

B.

B. #.#.2" 2" D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM

R

RPPCCPPAA<<AAIICCPPAA<<CCMMAACCIIAAEE88AAMMIINNAATTIIOONNJJEESSTTIIOONNSS PPaa--ee++ooff""""

M

MAANNAAGGEEMMEENNTTAADDVVIISSOORRYYSSEERRVVIICCEESS RRIISSKKSS

)+.

)+. Co3uter Co3Co3uter Co3an% variaan% varian$e of return i :##. n$e of return i :##. If t'e R,;uare* of t'e re-rIf t'e R,;uare* of t'e re-reion (et&eeion (et&eenen t'e $o3an% return an* t'e 3ar4et return i #.+< $al$ulate t'e uni;ue ri4 for t'e $o3an%. t'e $o3an% return an* t'e 3ar4et return i #.+< $al$ulate t'e uni;ue ri4 for t'e $o3an%. A

A.. ==++# # CC.. ::####

B.

B. "# "# D.D. MoMore re ininforfor3a3atition on i i nenee*ee*e* * B B   MM Mar4et Ri4 Pre3iu3

Mar4et Ri4 Pre3iu3 )#.

)#. T'e 'itoriT'e 'itori$al return *ata for t'e at t'ree %ea$al return *ata for t'e at t'ree %ear for Sto$4 B an* t'e to$4 3ar4et orr for Sto$4 B an* t'e to$4 3ar4et ortfoliotfolio are5 Sto$4 B5, )+6< #6< )+6< Mar4et Portfolio5, 1#6< 1)6< )#6.

are5 Sto$4 B5, )+6< #6< )+6< Mar4et Portfolio5, 1#6< 1)6< )#6. If t'e ri4,free rate i +6<If t'e ri4,free rate i +6< $al$ulate t'e 3ar4et ri4 re3iu3.

$al$ulate t'e 3ar4et ri4 re3iu3. A

A.. 11##6 6 CC.. 1122..1166

B.

B. 1+1+6 6 D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM Re;uire* Rate of Return

Re;uire* Rate of Return )1.

)1. T'e 'itoriT'e 'itori$al return *ata for t'e at t'ree %ea$al return *ata for t'e at t'ree %ear for Sto$4 B an* t'e to$4 3ar4et orr for Sto$4 B an* t'e to$4 3ar4et ortfoliotfolio are5 Sto$4 B5, )+6< #6< )+6<

are5 Sto$4 B5, )+6< #6< )+6< Mar4et Portfolio5, 1#6< 1)6< )#6. Mar4et Portfolio5, 1#6< 1)6< )#6. Cal$ulate t'e re;uire* rateCal$ulate t'e re;uire* rate of return /$ot of e;uit%0 for Sto$4 B uin- CAPM.

of return /$ot of e;uit%0 for Sto$4 B uin- CAPM. A

A.. 11))..==6 6 CC.. 11++..66

B.

B. 2.2."6 "6 D.D. NoNone ne of of t't'e e a(a(ovovee B  MB  M

T)-$tck Prt!"i T)-$tck Prt!"i

Varian$e of Return Varian$e of Return 1+.

1+. lori*a Co3lori*a Co3an% /C0 an* Minnan% /C0 an* Minneota Co3aneota Co3an% /MC0 are (ot' ervi$% /MC0 are (ot' ervi$e $o3aniee $o3anie. . T'eirT'eir 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. Cal$ulate t'e varian$e of return for C an* MC.

Cal$ulate t'e varian$e of return for C an* MC. A.

A. CC5 5 1## 1## MCMC5 5 )=" )=" C.C. CC5 5 )1" )1" MCMC5 5 11## B.

B. CC5 5 )= )= MCMC5 5 1:" 1:" D.D. NonNone e of of t'e t'e a(oa(ove ve B B   MM Stan*ar* Deviation

Stan*ar* Deviation 1=.

1=. lori*a Co3lori*a Co3an% /C0 an* Minnan% /C0 an* Minneota Co3aneota Co3an% /MC0 are (ot' ervi$% /MC0 are (ot' ervi$e $o3aniee $o3anie. . T'eirT'eir 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. Cal$ulate t'e tan*ar* *eviation of return for C an* MC.

Cal$ulate t'e tan*ar* *eviation of return for C an* MC. A.

A. CC51#51#6 6 MCMC5 5 1"6 1"6 C.C. CC5 5 126 126 MCMC5 5 1+61+6 B.

B. CC5 5 126 126 MCMC5 5 1"6 1"6 D.D. NonNone e of of t'e t'e a(oa(ove ve B B   MM Covarian$e

Covarian$e 1#.

1#. If t'e $ovarian$If t'e $ovarian$e of Sto$4 A &ite of Sto$4 A &it' Sto$4 B i 1##< &'at i t'e $ovaria' Sto$4 B i 1##< &'at i t'e $ovarian$e of Sto$4 B &it' Sto$4n$e of Sto$4 B &it' Sto$4 A>

A> A

A.. LL11### # CC.. 1111####

B.

B. 11## ## D.D. NeeNee* * a**a**ititionional al ininforfor3a3atition on B B   MM 1".

1". lori*a Co3lori*a Co3an% /C0 an* Minnan% /C0 an* Minneota Co3aeota Co3an% /MC0 are (ot' ervi$n% /MC0 are (ot' ervi$e $o3aniee $o3anie. . T'eirT'eir 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. Cal$ulate t'e $ovarian$e (et&een t'e return of C an* MC.

Cal$ulate t'e $ovarian$e (et&een t'e return of C an* MC. A.

A. 1=1== = /#/#.#.#1=1=====0 0 C.C. )=)=) ) /#/#.#.#)=)=)0)0 B.

B. 1#1#  /#./#.#1#10 0 D.D. NonNone e of of t't'e e a(oa(ove ve B B   MM 1.

1. Sto$4 M an* Sto$4 N 'ave 'a* retuSto$4 M an* Sto$4 N 'ave 'a* return for t'e at t'ree %ear of 1)6rn for t'e at t'ree %ear of 1)6. 1#6< ))6 an* "6<. 1#6< ))6 an* "6< 1=6< )+6 ree$tivel%. Cal$u

1=6< )+6 ree$tivel%. Cal$u late t'e $ovarian$e (et&een t'e t&o late t'e $ovarian$e (et&een t'e t&o e$uritie.e$uritie. A

A.. LL11::2 2 CC.. LL11))

B.

B. 11:2 :2 D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM ).

). StoSto$4 P $4 P an* to$an* to$4 J 4 J 'av'ave 'a* e 'a* annuannual retural return of ,1#6< 1)6< )26 an* 26< 16< )+6n of ,1#6< 1)6< )26 an* 26< 16< )+6 ree$tivel%.

ree$tivel%. Cal$ulate t'e $ovarian$e of return (et&een t'e Cal$ulate t'e $ovarian$e of return (et&een t'e e$uritie.e$uritie. A

A.. 11++: : CC.. 11####

B.

B. 11+: +: D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM +.

+. If t'e $orrelatioIf t'e $orrelation $oeffi$ien $oeffi$ient (et&een to$4 C an* to$4 D i L1.#6 an* t'e tan*ar* *eviatnt (et&een to$4 C an* to$4 D i L1.#6 an* t'e tan*ar* *eviationion of return for to$4 C i 1=6 an* t'at for to$4 D i #6< $al$ulate t'e $ovarian$e (et&een of return for to$4 C i 1=6 an* t'at for to$4 D i #6< $al$ulate t'e $ovarian$e (et&een to$4 C an* to$4 D.

to$4 C an* to$4 D. A

A.. LL++= = CC.. ++==

B.

B. L+L+=# =# D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM Correlation Coeffi$ient  Given Covarian$e an* Stan*ar* Deviation

Correlation Coeffi$ient  Given Covarian$e an* Stan*ar* Deviation .

. If t'e $ovarian$e (et&eeIf t'e $ovarian$e (et&een to$4 A an* to$4 B i 1##< t'e tan*ar* *eviation of to$4 A in to$4 A an* to$4 B i 1##< t'e tan*ar* *eviation of to$4 A i 1#6 1#6 an* t'at of to$4 B i )#6< $al$ulate t'e $orrelation $oeffi$ient (et&een t'e t&o e$uritie. an* t'at of to$4 B i )#6< $al$ulate t'e $orrelation $oeffi$ient (et&een t'e t&o e$uritie. A

A.. LL##..= = CC.. ##..==

B.

B. L1L1.# .# D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM 1?.

1?. lori*a Co3lori*a Co3an% /C0 an* Minnan% /C0 an* Minneota Co3aeota Co3an% /MC0 are (ot' ervi$n% /MC0 are (ot' ervi$e $o3aniee $o3anie. . T'eirT'eir 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. 'itori$al return for t'e at t'ree %ear are5 C5 ,1#6<1=6< )=6H MC5 1#6< "6< )6. Cal$ulate t'e $orrelation $oeffi$ient (et&een t'e return of C an* MC.

Cal$ulate t'e $orrelation $oeffi$ient (et&een t'e return of C an* MC. A

A.. ##..# # CC.. ##..""11== B.

B. L#L#."."1= 1= D.D. NoNone ne of of t't'e e a(a(ovove e B B   MM

R