Portfolios on the Capital Market Line (CML) have different levels of ____? Idiosyncratic risk Total risk Sharpe Ratio Risk-free rate None of the abov

4. What are the various types of risk intrinsic to fixed-income portfolios?

Which asset below is generally the most suitable benchmark measure of the risk-free return? Treasury bills Small stocks Long-term government bonds Non-investment grade bonds Common stocks

According to the capital asset pricing model, assets with Lower; lower; unsystematic Higher; higher, unsystematic Lower; higher; unsystematic Higher; higher; systematic Higher; lower; systematic betas have expected returns because betas quantify the degree of risk. Please fill in the blank.

Critically discuss the similarities and differences between Markowitz’s Portfolio Theory or also known as Modern Portfolio Theory (MPT) and Capital Asset Pricing Model (CAPM).

Which one of the following is a property of a pure arbitrage portfolio?a. Negative investment.b. Zero return.c. Positive systematic risk.d. Zero total risk.

can be progressively eliminated by adding stocks to a portfolio? Systematic risk Specific risk Market risk Inflation rate risk

Explain the meaning and differences between the correlation coefficients “p” in the traditional portfolio and the beta “B” coefficients in the capital asset pricing model (CMPL) approach

a)explain the concept of the delta normal method for calculating VAR when options are present in the portfolio.      b)explain the basic concepts of the historical method and the Monte Carlo simulation method of calculating VARs.       c)discuss the benefits and limitations of VAR.      d)define credit risk (default risk).       e)explain how option pricing theory can be used in valuing default risk.

In portfolio management, risk reduction is achieved by investing in a portfolio in which the securities Question 3 options:1) have a high covariance 2) have a high correlation coefficient 3) have a low coefficient of variation 4) have a lowcovariance 5) are perfectly positively correlated.