13. A stock with a Beta of 0.86 means A·The stock is 14% less profitable than th

Question

13. A stock with a Beta of 0.86 means A·The stock is 14% less profitable than the SP500, B. The stock has a P/E of 0.86. C. When the SP500 goes down 1%, the stock goes down 14% on average. D. When the SPS00 goes down 1%, the stock goes down 0.86% on average 14, Over 98% of all stock portfolio managers in the US: A. Deliver positive Beta. B. Deliver position Alpha. C. Do not beat their benchmark. D. Deliver positive Alpha le portfolios, where Questions 15-20 refer to the following graph of risk vs. return for a basket of possib each lettered point represents a different portfollio. The shaded area represents all portfolios. Expected return 6.0% 2.35% .. 0% Risk 15. Which portfolio is infeasible? A. C B. E C. G D. all of the above are feasible 16. Which portfolio has the highest return? A. A B. B C. C D. D

Explanation / Answer

13) D

Beta of 0.86 implies that if the market goes down by 1%, this stock will go down by 0.86%

14) C

Most fund managers are not able to beat the benchmark and generate alpha.

15) B

Portfolio E is infeasible as it offers higher return for lower risk.

16) B

Portfolio B is above other porfolio on y-axis which represents returns.

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