Topic 4 Flashcards
The payout ratio of a company is
The result of the dividends per share divided by the earnings per share.
Consider a portfolio composed by a large number of stocks. In this portfolio,
The idiosyncratic risk tends to 0
Consider a portfolio composed by a large number of stocks. In this portfolio,
The systematic risk is zero
FALSE
In which case is it possible to build a risk free portfolio?
Correlation coefficient is equal to -1 and 1 + short selling.
When the correlation coefficient is equal to 0, we can build a risk-free portfolio
FALSE
When the correlation coefficient is equal to que and short selling is not allowed, we can build a risk-free portfolio
FALSE
When the correlation coefficient lies in the interval (-1,1) , we can build a risk-free portfolio
FALSE
Systematic risk can be reduced by including more assets in your portfolio.
FALSE
The total risk of a portfolio increases when the total number of portfolio’s assets increases.
FALSE
The total risk of a portfolio diminishes when the total number of portfolio’s assets increases.
TRUE
Systematic or market risk is diversifiable
FALSE
Idiosyncratic risk or specific risk increases when adding more risky assets to our portfolio
FALSE
The total risk of the portfolio is reduced when increasing the number of risky assets. Note: we assume that correlations among them are different.
TRUE
The Gordon model does not use the stock dividends for computing the stock price
FALSE
When increasing the total number of assets in a portfolio, total risk can be eliminated;
FALSE; specific
