See the following figure from the 4th Excel assignment. We consider the investment implication of shifting portfolio weights gradually from the index fund to AMD. The right chart below plots portfolio’s standard deviation (i.e., risk) against the weight on AMD. We see an up-ward sloping line, that is, as we increase portfolio weight on AMD, the portfolio risk increases. Which of the following formula correctly calculate the slope of the line. (Note, subscript i indicates for AMD, and subscript m for “market” proxied here by the index fund.)
According to the put-call parity theorem, the payoffs associ…
According to the put-call parity theorem, the payoffs associated with ownership of a call option can be replicated by __________.
You purchase a put option on a stock. The profit at contract…
You purchase a put option on a stock. The profit at contract maturity of the option position is __________, where X equals the option’s strike price, ST is the stock price at contract expiration, and PO is the original purchase price of the option.
Generally speaking, as a firm progresses through the industr…
Generally speaking, as a firm progresses through the industry life cycle, you would expect the PVGO to __________ as a percentage of share price.
You invest $230 in security A with a beta of 1.5 and $660 in…
You invest $230 in security A with a beta of 1.5 and $660 in security B with a beta of 0.90. The beta of this portfolio is __________.
In the absence of air resistance, a projectile launched at…
In the absence of air resistance, a projectile launched at an angle of 15 o above the horizontal will have the same range as a projectile launched at which of the following angles?
A firm is expected to produce earnings next year of $3.5 per…
A firm is expected to produce earnings next year of $3.5 per share. It plans to reinvest 30% of its earnings at 28% (ROE). If the cost of equity is 11%, what should be the value of the stock?
The MinMaxScaler class in scikit-learn normalizes each colum…
The MinMaxScaler class in scikit-learn normalizes each column of a dataset by scaling the values to a specified range, typically between 0 and 1.
Unusually early activation of the maturation process that is…
Unusually early activation of the maturation process that is considered normal later in life. Manifestations of sexual development before age nine in boys or age eight in girls is called:
A portfolio with a 18% standard deviation generated a return…
A portfolio with a 18% standard deviation generated a return of 11% last year when T-bills were paying 4%. This portfolio had a Sharpe ratio of __________.