Solved Questions

Solutions
Question
1
solution
Category: Finance
What are the differences between the relative volatility graph ( Figure 8.7 ), where "betas are made," and the SML graph ( Figure 8.8 ), where "betas are used"? Explain how both graphs are constructed and what information they convey.
1
solution
Category: Finance
An investor has a two-stock portfolio with $25,000 invested in Stock X and $50,000 invested in Stock Y. X's beta is 1.50, and Y's beta is 0.60. What is the beta of the investor's portfolio? (0.90)
1
solution
Category: Finance
Why is it argued that beta is the best measure of a stock's risk?
1
solution
Category: Finance
What is an average-risk stock? What is the beta of such a stock?
1
solution
Category: Finance
In general, can the riskiness of a portfolio be reduced to zero by increasing the number of stocks in the portfolio? Explain.