Topic 6: Risk and Return

Question 1

CV =

Answer 1

Standard deviation / Expected return

Question 2

In the two-asset case, the expected return on our portfolio depends on two things:

Answer 2

(1) the portfolio weights
(2) the individual asset returns.

Question 3

The risk of a portfolio is measured by its ______________

Answer 3

standard deviation or variance

Question 4

portfolios whose return is maximized for a given level
of risk or, equivalently, portfolios whose risk is minimized for a given
level of return

Answer 4

efficient
portfolios

Question 5

According to the ________________________, the expected return for all assets is determined
by the asset’s correlation to the “market portfolio” and the risk-free
return

Answer 5

CAPM

Question 6

CV measures __________________.

Answer 6

risk/reward ratio.