Question 4 of 50

According to the holding period return formula, how is the return calculated if an asset pays a dividend during the period?

An investor buys a stock for 50 USD. At the end of the period, the stock is worth 54 USD and paid a 1 USD dividend. What is the holding period return?

Which formula represents the arithmetic mean return?

The geometric mean return formula involves taking the n-th root of:

Given returns of +100 percent and -50 percent over two periods, what is the geometric mean return?

The correlation coefficient between two assets is calculated as:

If the covariance between Asset A and Asset B is 0.005, the standard deviation of A is 0.10, and the standard deviation of B is 0.20, what is the correlation?

In the standard deviation formula for a two-asset portfolio, the interaction term is:

If two assets are perfectly uncorrelated (correlation = 0), the third term under the square root in the portfolio standard deviation formula becomes:

Which component is NOT part of the portfolio standard deviation formula under the square root?

What is the equation of the Capital Market Line (CML)?

In the CML equation, the term [(E(Rm) - Rf) / sigma_m] represents:

If the risk-free rate is 2 percent, the market return is 10 percent, market standard deviation is 20 percent, and a portfolio standard deviation is 15 percent, what is the expected return using the CML?

According to the 'Formulas' page, total risk is defined as:

The formula for beta (beta_i) is given by:

An alternative formula for beta presented in the text involves correlation (rho). It is:

If the covariance of Asset A with the market is 0.03 and the variance of the market is 0.02, what is the beta of Asset A?

The Capital Asset Pricing Model (CAPM) equation calculates:

In the CAPM formula, the term [E(Rmkt) - Rf] is known as:

Calculate the CAPM expected return if Rf is 3 percent, Beta is 1.2, and expected market return is 8 percent.

The Sharpe ratio is defined as:

Which risk measure is used in the denominator of the Sharpe ratio?

If Portfolio A has a return of 15 percent, the risk-free rate is 5 percent, and the portfolio standard deviation is 20 percent, what is the Sharpe ratio?

The M-squared measure formula is given as:

In the M-squared formula, the term (sigma_M / sigma_P) serves to:

Calculate M-squared if: Rp=14 percent, Rf=2 percent, sigma_p=24 percent, sigma_m=12 percent, Rm=10 percent.

The Treynor measure formula is:

Comparison of Sharpe and Treynor measures: Sharpe uses ____ while Treynor uses ____.

Jensen's alpha is calculated as:

If a portfolio has a return of 12 percent, beta of 1.0, Rf is 4 percent, and Rm is 10 percent, what is Jensen's alpha?

Which performance measure represents the vertical distance between the portfolio's return and the Security Market Line (SML)?

In the standard deviation formula for a portfolio, w1 represents:

Calculate the portfolio standard deviation if w1=1.0, w2=0, and sigma1=0.20.

Which formula allows calculating the expected return of a portfolio based on the Capital Market Line?

If systematic risk is 5 units and unsystematic risk is 3 units, what is total risk according to the formula?

The geometric mean is usually ____ the arithmetic mean for a volatile series of returns.

Using the correlation formula, if sigma1 increases while covariance remains constant, the correlation:

Which of the following variables is NOT in the CAPM formula?

If a stock's holding period return is calculated as (P_t - P_0 + Div_t)/P_0, what does P_0 represent?

Calculate Treynor measure given: Rp=10 percent, Rf=2 percent, Beta=2.

What is the implied market risk premium if CAPM E(Ri)=10 percent, Rf=4 percent, and Beta=1.5?

If covariance between two assets is negative, the interaction term in the portfolio standard deviation calculation will be:

In the M-squared formula, if sigma_p equals sigma_m, then M-squared equals:

Which formula uses the concept of 'slope of the CML'?

Calculate the Geometric Mean of 1.10 and 1.21 (representing 1+R).

In the correlation formula, sigma_1 represents:

If a portfolio has zero systematic risk (beta=0), its CAPM expected return is:

Which formula involves adding back the risk-free rate to a risk-adjusted excess return?

In the context of the formulas provided, the term 'Div_t' refers to: