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Chapter 2: Portfolio Theory

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Essentials Of Investments
Pages: 109 - 290
Essentials Of Investments

Essentials Of Investments

Book edition 9th
Author(s) Zvi Bodie, Alex Kane, Alan Marcus, Alan J. Marcus
Pages 748 pages
ISBN 9780078034695

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169 Questions for Chapter 2: Portfolio Theory

  1. For Problems 12–16, assume that you manage a risky portfolio with an expected rate of return of 17% and a standard deviation of 27%. The T-bill rate is 7%

    Found on Page 142
  2. Probabilities for three states of the economy and probabilities for the returns on a particular stock in each state are shown in the table below:

    Found on Page 145
  3. Assume that both X and Y are well-diversified portfolios and the risk-free rate is 8%.

    Found on Page 230
  4. Question: What is meant by data mining, and why must technical analysts be careful not to engage in it?

    Found on Page 284
  5. A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.5%. The probability distributions of the risky funds are:

    Found on Page 184
  6. The market price of a security is $40. Its expected rate of return is 13%. The risk-free rate is 7%, and the market risk premium is 8%. What will the market price of the security be if its beta doubles (and all other variables remain unchanged)? Assume the stock is expected to pay a constant dividend in perpetuity.

    Found on Page 225
  7. An analyst estimates that a stock has the following probabilities of return depending on the state of the economy. What is the expected return of the stock?

    Found on Page 145
  8. According to the theory of arbitrage:

    Found on Page 231
  9. Question: Even if prices follow a random walk, they still may not be informationally efficient. Explain why this may be true, and why it matters for the efficient allocation of capital in our economy.

    Found on Page 285
  10. A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.5%. The probability distributions of the risky funds are:

    Found on Page 184

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