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NEW QUESTION: 1
According to the CAPM, the expected return from a risky asset is a function of:
A. diversifiable risk that the asset brings
B. how much the risky asset contributes to portfolio risk
C. all of the above
D. the riskiness, ie the volatility of the risky asset alone
Answer: B
Explanation:
Explanation
According to the CAPM, the expected return from a risky asset is a function of the contribution of the risky asset to the total risk of the market portfolio. Nothing else matters. All assets are priced according to the risk they bring to the market portfolio, regardless of their individual level of risk. An asset that is very volatile on its own, but has a negative correlation to the market may be priced high, ie have low expected return, because of its impact on the risk of the market portfolio. Therefore Choice 'a' is the correct answer, and the other options are incorrect.
Recall that according to the CAPM = covariancex, y / variancex, where x is the market portfolio and y is the risky asset.
The beta itself is a function of the covariance of the asset's returns with market returns, and therefore only the driver of expected return for an asset is its beta, which is determined by the asset's contribution to portfolio risk. ( = covariance(x, y) / variance(x), where x is the market portfolio and y is the risky asset. )
NEW QUESTION: 2
Click the Exhibit button.
In the exhibit, your Layer 3 VPN uses BGP to send and receive routes from customers. Customer A reports that remote routes are not being received on CE2.Which configuration parameter is missing from your PE router configuration?
A. vrf-export
B. vrf-import
C. advertise-peer-as
D. as-override
Answer: D
NEW QUESTION: 3
Select each Process Step on the left and drag it to the appropriate Flow Shape on the right.
Answer:
Explanation:
