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NEW QUESTION: 1
Which of the following statements about portfolio management is TRUE?
A. The security market line (SML) measures systematic and unsystematic risk versus expected return; the CML measures total risk.
B. The expected return on a 0 beta security is the expected market return.
C. Combining the capital market line (CML) (risk-free rate and efficient frontier) with an investor's indifference curve map separates out the decision to invest from the decision of what to invest in.
D. As an investor diversifies away the unsystematic portion of risk, the correlation between his portfolio return and that of the market approaches negative one.
Answer: C
Explanation:
Explanation/Reference:
Explanation:
Combining the CML (risk-free rate and efficient frontier) with an investor's indifference curve map separates out the decision to invest from what to invest in and is called the separation theorem. The investment selection process is thus simplified from stock picking to efficient portfolio construction through diversification.
The other statements are false. As an investor diversifies away the unsystematic portion of risk, the correlation between his portfolio return and that of the market approaches positive one. (Remember that the market portfolio has no unsystematic risk). The SML measures systematic risk, or beta risk. The expected return on a 0 beta security is the risk free rate (the market premium term has a value of 0).
NEW QUESTION: 2
Which best summarizes the ArcSight elevator pitch?
A. Blocks cyber-attacks
B. Cuts down the time to detect and respond to threats
C. Provides high quality reports for regulatory compliance
D. Displays risk through scoring
Answer: B
NEW QUESTION: 3
In the ''Making moments last forever1'' section, convert the five paragraphs starting with ''Corporate events'' to a bulleted list.
Answer:
Explanation:
Select the text you want to change into a list.
Go to Home> Bullets or Home> Numbering.