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Stock Return Quiz

Risk premium is the difference between the security return and the treasury bill return.

Diversification reduces risk because prices of different securities do not move exactly together.

The risk that cannot be eliminated by diversification is called market risk.

The relative covariance between a specific stock's return and the return to market is called beta.

The relative covariance between a specific stock's return and the return to market is called beta.

Beta of a well-diversified portfolio is equal to the average beta of the stock market index.

As the number of stocks in a portfolio is increased

The variance of the market return is

What is the arithmetic average return of bonds earning 5%, stocks earning 11% and treasuries earning 2%?

Diversification works because?

Tagged as: called beta, called beta, return
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