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NEW QUESTION: 1

A. Option B
B. Option A
C. Option D
D. Option C
Answer: A,D

NEW QUESTION: 2
The IBM SPSS Statistics Select Cases provides various ways to select cases included in further analysis. If you needed to conduct analysis on those respondents whose age is more than 30 years, earning in excess of $40000, which option in this dialog would you choose to specify these criteria?
A. If condition is satisfied
B. Based on time or case range
C. Random sample of cases
D. Use filter variable
Answer: A

NEW QUESTION: 3
Security A has a beta of 1.2 while security B has a beta of 1.5. If the risk free rate is 3%, and the expected total return from security A is 8%, what is the excess return expected from security B?
A. 7.17%
B. 9.25%
C. 4.17%
D. 6.25%
Answer: D
Explanation:
Explanation
This question requires us to use the CAPM.
Recall that according to CAPM the expected return on an asset = The risk free rate + x Market risk premium.
Using the beta and expected return of security A, we can determine the market risk premium to be (8% -
3%)/1.2 = 4.1667%. The excess return is the return over the risk free rate, and for security B, this is nothing but the beta multiplied by the market risk premium. Therefore the correct answer is 4.1667% x 1.5 = 6.25%.
Note that this is the 'excess return', and not the total return. (Total return will include the risk free rate).