Market portfolio has an expected return of 10% and a volatility of 20%. Apple’s stock has a volatility 30%.<a> Given its higher volatility, should we expect Apple to have an equity cost of capital that higher than 10%?

The return that is expected by investors from a common stock is also called its market capitalization rate, or cost of equity capital.Group of answer choicesFalseTrue

Which statement is correct regarding the following information? - Shares in company A have an expected return of 8%, standard deviation of 15%  and beta coefficient of 1.3- Shares in company B have an expected return of 12%, standard deviation of 25% and beta coefficient of -0.75.Group of answer choicesIn a single asset portfolio, security A would be riskier because its coefficient of variation is higher than security B.In a single asset portfolio, security B would be riskier because its coefficient of variation is higher than security ASecurity A is less risky if held in a diversified portfolio because of its positive correlation with market portfolioSecurity B is riskier if held in a diversified portfolio because of its beta coefficient of –0.75None of the options is correct.

Which of the statement is WRONG?A.There is no clear relationship between the volatility and return of individual stocks.B.The market portfolio contains all shares of all stocks and securities in the market.C.The total risk of a security contains risk which is not rewarded.D.Diversification eliminates both idiosyncratic risk and systematic risk.

Suppose you have $10,000 in cash and you decide to borrow another $10,000 at a 6% interest rate to invest in the stock market. You invest the entire $20,000 in an exchange traded fund (ETF) with a 12% expected return and a 20% volatility. The volatility of your investment is closest to: A) 40% B) 20% C) 30% D) 24% E) None of the above

You own a portfolio that is 30% invested in Stock X, 20% in Stock Y, and 50% in Stock Z. The expected returns on these three stocks are 11%, 17%, and 13%, respectively. What is the expected return on the portfolio? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Portfolio expected return