home *** CD-ROM | disk | FTP | other *** search
/ Fundamentals of Corporate Finance Self Study / Fundamentals of Corporate Finance - Self-Study.iso / Setup / CHAP13.QF_ / CHAP13.QF
Unknown  |  2001-12-19  |  111.4 KB

open in: MacOS 8.1     |     Win98     |     DOS

view JSON data     |     view as text

This file was not able to be converted.
This format is not currently supported by dexvert.

ConfidenceProgramDetectionMatch TypeSupport
100% file data default
100% TrID PrintFox/Pagefox bitmap (320x200) default (weak)
100% gt2 Kopftext: 'BRGEXM0500v0002ROSS Chapter 13' default (weak)



hex view
+--------+-------------------------+-------------------------+--------+--------+
|00000000| 42 52 47 45 58 4d 30 35 | 30 30 76 30 30 30 32 52 |BRGEXM05|00v0002R|
|00000010| 4f 53 53 20 20 20 20 43 | 68 61 70 74 65 72 20 31 |OSS C|hapter 1|
|00000020| 33 3a 20 52 65 74 75 72 | 6e 2c 20 52 69 73 6b 2c |3: Retur|n, Risk,|
|00000030| 20 61 6e 64 20 74 68 65 | 2e 2e 2e 20 20 20 20 00 | and the|... .|
|00000040| 00 00 00 64 00 00 00 00 | 00 00 00 64 00 72 27 00 |...d....|...d.r'.|
|00000050| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 be 00 00 |........|........|
|00000060| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000070| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000080| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000090| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000000a0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000000b0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 18 14 00 |........|........|
|000000c0| 00 31 01 00 49 66 20 74 | 68 65 20 74 6f 74 61 6c |.1..If t|he total|
|000000d0| 20 72 69 73 6b 20 6f 66 | 20 66 69 72 6d 20 58 20 | risk of| firm X |
|000000e0| 69 73 2e 2e 2e 20 20 20 | 20 20 20 20 01 00 65 00 |is... | ..e.|
|000000f0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000100| 00 00 00 00 00 00 00 00 | 01 00 00 00 00 00 00 00 |........|........|
|00000110| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000120| 00 00 00 00 31 02 00 4e | 6f 20 6d 61 74 74 65 72 |....1..N|o matter|
|00000130| 20 68 6f 77 20 6d 75 63 | 68 20 74 6f 74 61 6c 20 | how muc|h total |
|00000140| 72 69 73 6b 20 61 6e 2e | 2e 2e 20 20 20 20 20 01 |risk an.|.. .|
|00000150| 00 65 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |.e......|........|
|00000160| 00 00 00 00 00 00 00 00 | 00 00 00 01 00 00 00 00 |........|........|
|00000170| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000180| 00 00 00 00 00 00 00 31 | 03 00 49 66 20 74 68 65 |.......1|..If the|
|00000190| 20 73 74 61 6e 64 61 72 | 64 20 64 65 76 69 61 74 | standar|d deviat|
|000001a0| 69 6f 6e 20 6f 66 20 72 | 65 74 75 72 6e 2e 2e 2e |ion of r|eturn...|
|000001b0| 20 20 01 00 65 00 00 00 | 00 00 00 00 00 00 00 00 | ..e...|........|
|000001c0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 01 00 |........|........|
|000001d0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000001e0| 00 00 00 00 00 00 00 00 | 00 00 31 04 00 41 73 73 |........|..1..Ass|
|000001f0| 75 6d 65 20 61 6c 6c 20 | 6f 66 20 74 68 65 20 73 |ume all |of the s|
|00000200| 74 6f 63 6b 73 20 69 6e | 20 61 20 67 69 76 65 6e |tocks in| a given|
|00000210| 2e 2e 2e 20 20 01 00 65 | 00 00 00 00 00 00 00 00 |... ..e|........|
|00000220| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000230| 00 01 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000240| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 31 05 00 |........|.....1..|
|00000250| 53 79 73 74 65 6d 61 74 | 69 63 20 72 69 73 6b 20 |Systemat|ic risk |
|00000260| 69 73 20 61 20 74 79 70 | 65 20 6f 66 20 72 69 73 |is a typ|e of ris|
|00000270| 6b 2e 2e 2e 20 20 20 20 | 01 00 65 00 00 00 00 00 |k... |..e.....|
|00000280| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000290| 00 00 00 00 01 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000002a0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000002b0| 31 06 00 41 20 75 6e 69 | 71 75 65 20 72 69 73 6b |1..A uni|que risk|
|000002c0| 20 69 73 20 61 20 72 69 | 73 6b 20 74 68 61 74 20 | is a ri|sk that |
|000002d0| 61 66 66 65 63 74 73 2e | 2e 2e 20 01 00 65 00 00 |affects.|.. ..e..|
|000002e0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000002f0| 00 00 00 00 00 00 00 01 | 00 00 00 00 00 00 00 00 |........|........|
|00000300| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000310| 00 00 00 31 07 00 41 20 | 6d 61 72 6b 65 74 20 72 |...1..A |market r|
|00000320| 69 73 6b 20 66 61 63 74 | 6f 72 20 69 73 20 61 20 |isk fact|or is a |
|00000330| 72 69 73 6b 20 74 68 61 | 74 2e 2e 2e 20 20 01 00 |risk tha|t... ..|
|00000340| 65 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |e.......|........|
|00000350| 00 00 00 00 00 00 00 00 | 00 00 01 00 00 00 00 00 |........|........|
|00000360| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000370| 00 00 00 00 00 00 31 08 | 00 49 74 20 69 73 20 4e |......1.|.It is N|
|00000380| 4f 54 20 70 6f 73 73 69 | 62 6c 65 20 74 6f 20 63 |OT possi|ble to c|
|00000390| 6f 6e 73 74 72 75 63 74 | 20 61 2e 2e 2e 20 20 20 |onstruct| a... |
|000003a0| 20 01 00 65 00 00 00 00 | 00 00 00 00 00 00 00 00 | ..e....|........|
|000003b0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 01 00 00 |........|........|
|000003c0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000003d0| 00 00 00 00 00 00 00 00 | 00 31 09 00 59 6f 75 20 |........|.1..You |
|000003e0| 62 65 6c 69 65 76 65 20 | 74 68 61 74 20 74 68 65 |believe |that the|
|000003f0| 20 70 6f 73 73 69 62 6c | 65 20 72 65 74 75 72 6e | possibl|e return|
|00000400| 73 2e 2e 2e 01 00 65 00 | 00 00 00 00 00 00 00 00 |s.....e.|........|
|00000410| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000420| 01 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000430| 00 00 00 00 00 00 00 00 | 00 00 00 00 31 0a 00 49 |........|....1..I|
|00000440| 66 20 79 6f 75 20 69 6e | 76 65 73 74 20 69 6e 20 |f you in|vest in |
|00000450| 73 74 6f 63 6b 73 20 77 | 69 74 68 2e 2e 2e 20 20 |stocks w|ith... |
|00000460| 20 20 20 20 20 20 20 01 | 00 65 00 00 00 00 00 00 | .|.e......|
|00000470| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000480| 00 00 00 01 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000490| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 31 |........|.......1|
|000004a0| 0b 00 49 66 20 77 6f 72 | 6c 64 20 65 76 65 6e 74 |..If wor|ld event|
|000004b0| 73 20 63 61 75 73 65 20 | 69 6e 76 65 73 74 6f 72 |s cause |investor|
|000004c0| 73 20 74 6f 2e 2e 2e 20 | 20 20 01 00 65 00 00 00 |s to... | ..e...|
|000004d0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000004e0| 00 00 00 00 00 00 01 00 | 00 00 00 00 00 00 00 00 |........|........|
|000004f0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000500| 00 00 31 0c 00 54 68 65 | 20 70 72 6f 6a 65 63 74 |..1..The| project|
|00000510| 65 64 20 72 69 73 6b 20 | 70 72 65 6d 69 75 6d 20 |ed risk |premium |
|00000520| 69 73 20 64 65 66 69 6e | 65 64 2e 2e 2e 01 00 65 |is defin|ed.....e|
|00000530| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000540| 00 00 00 00 00 00 00 00 | 00 01 00 00 00 00 00 00 |........|........|
|00000550| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000560| 00 00 00 00 00 31 0d 00 | 54 68 65 20 72 65 61 6c |.....1..|The real|
|00000570| 69 7a 65 64 20 72 65 74 | 75 72 6e 20 6f 6e 20 61 |ized ret|urn on a|
|00000580| 6e 20 61 73 73 65 74 20 | 63 61 6e 2e 2e 2e 20 20 |n asset |can... |
|00000590| 01 00 65 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |..e.....|........|
|000005a0| 00 00 00 00 00 00 00 00 | 00 00 00 00 01 00 00 00 |........|........|
|000005b0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000005c0| 00 00 00 00 00 00 00 00 | 31 0e 00 41 20 66 69 72 |........|1..A fir|
|000005d0| 6d 20 69 6e 20 53 6f 75 | 74 68 20 44 61 6b 6f 74 |m in Sou|th Dakot|
|000005e0| 61 20 61 6e 6e 6f 75 6e | 63 65 73 20 61 2e 2e 2e |a announ|ces a...|
|000005f0| 20 20 20 01 00 65 00 00 | 00 00 00 00 00 00 00 00 | ..e..|........|
|00000600| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 01 |........|........|
|00000610| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000620| 00 00 00 00 00 00 00 00 | 00 00 00 31 0f 00 41 6e |........|...1..An|
|00000630| 20 65 78 61 6d 70 6c 65 | 20 6f 66 20 73 79 73 74 | example| of syst|
|00000640| 65 6d 61 74 69 63 20 72 | 69 73 6b 20 77 6f 75 6c |ematic r|isk woul|
|00000650| 64 2e 2e 2e 20 20 01 00 | 65 00 00 00 00 00 00 00 |d... ..|e.......|
|00000660| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000670| 00 00 01 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000680| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 31 10 |........|......1.|
|00000690| 00 53 6f 6d 65 20 6f 66 | 20 74 68 65 20 72 69 73 |.Some of| the ris|
|000006a0| 6b 69 6e 65 73 73 20 61 | 73 73 6f 63 69 61 74 65 |kiness a|ssociate|
|000006b0| 64 20 77 69 74 68 2e 2e | 2e 01 00 65 00 00 00 00 |d with..|...e....|
|000006c0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000006d0| 00 00 00 00 00 01 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000006e0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000006f0| 00 31 11 00 54 68 65 72 | 65 20 69 73 20 61 20 6d |.1..Ther|e is a m|
|00000700| 69 6e 69 6d 75 6d 20 6c | 65 76 65 6c 20 6f 66 20 |inimum l|evel of |
|00000710| 72 69 73 6b 20 74 68 61 | 74 2e 2e 2e 01 00 65 00 |risk tha|t.....e.|
|00000720| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000730| 00 00 00 00 00 00 00 00 | 01 00 00 00 00 00 00 00 |........|........|
|00000740| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000750| 00 00 00 00 31 12 00 54 | 68 65 20 73 65 63 75 72 |....1..T|he secur|
|00000760| 69 74 79 20 6d 61 72 6b | 65 74 20 6c 69 6e 65 20 |ity mark|et line |
|00000770| 69 73 20 62 61 73 65 64 | 20 6f 6e 2e 2e 2e 20 01 |is based| on... .|
|00000780| 00 65 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |.e......|........|
|00000790| 00 00 00 00 00 00 00 00 | 00 00 00 01 00 00 00 00 |........|........|
|000007a0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000007b0| 00 00 00 00 00 00 00 31 | 13 00 54 68 65 20 63 61 |.......1|..The ca|
|000007c0| 70 69 74 61 6c 20 61 73 | 73 65 74 20 70 72 69 63 |pital as|set pric|
|000007d0| 69 6e 67 20 6d 6f 64 65 | 6c 20 73 68 6f 77 73 2e |ing mode|l shows.|
|000007e0| 2e 2e 01 00 65 00 00 00 | 00 00 00 00 00 00 00 00 |....e...|........|
|000007f0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 01 00 |........|........|
|00000800| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000810| 00 00 00 00 00 00 00 00 | 00 00 31 14 00 42 6f 74 |........|..1..Bot|
|00000820| 68 20 73 79 73 74 65 6d | 61 74 69 63 20 72 69 73 |h system|atic ris|
|00000830| 6b 73 20 61 6e 64 2e 2e | 2e 20 20 20 20 20 20 20 |ks and..|. |
|00000840| 20 20 20 20 20 01 00 65 | 00 00 00 00 00 00 00 00 | ..e|........|
|00000850| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000860| 00 01 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000870| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 31 15 00 |........|.....1..|
|00000880| 57 68 69 63 68 20 6f 66 | 20 74 68 65 20 66 6f 6c |Which of| the fol|
|00000890| 6c 6f 77 69 6e 67 20 69 | 73 20 61 6e 20 61 63 63 |lowing i|s an acc|
|000008a0| 75 72 61 74 65 2e 2e 2e | 01 00 65 00 00 00 00 00 |urate...|..e.....|
|000008b0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000008c0| 00 00 00 00 01 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000008d0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000008e0| 31 16 00 54 68 65 20 73 | 74 6f 63 6b 20 69 6e 20 |1..The s|tock in |
|000008f0| 53 63 6f 75 6e 64 72 65 | 6c 2c 20 49 6e 63 2e 20 |Scoundre|l, Inc. |
|00000900| 73 68 6f 77 73 20 61 6e | 2e 2e 2e 01 00 65 00 00 |shows an|.....e..|
|00000910| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000920| 00 00 00 00 00 00 00 01 | 00 00 00 00 00 00 00 00 |........|........|
|00000930| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000940| 00 00 00 31 17 00 57 68 | 69 63 68 20 6f 66 20 74 |...1..Wh|ich of t|
|00000950| 68 65 20 66 6f 6c 6c 6f | 77 69 6e 67 20 69 73 20 |he follo|wing is |
|00000960| 74 72 75 65 20 61 62 6f | 75 74 2e 2e 2e 20 01 00 |true abo|ut... ..|
|00000970| 65 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |e.......|........|
|00000980| 00 00 00 00 00 00 00 00 | 00 00 01 00 00 00 00 00 |........|........|
|00000990| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000009a0| 00 00 00 00 00 00 31 18 | 00 49 66 20 74 68 65 20 |......1.|.If the |
|000009b0| 61 63 74 75 61 6c 20 72 | 65 74 75 72 6e 20 6f 6e |actual r|eturn on|
|000009c0| 20 61 6e 20 69 6e 76 65 | 73 74 6d 65 6e 74 2e 2e | an inve|stment..|
|000009d0| 2e 01 00 65 00 00 00 00 | 00 00 00 00 00 00 00 00 |...e....|........|
|000009e0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 01 00 00 |........|........|
|000009f0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000a00| 00 00 00 00 00 00 00 00 | 00 31 19 00 49 66 20 74 |........|.1..If t|
|00000a10| 68 65 20 73 74 6f 63 6b | 20 6d 61 72 6b 65 74 20 |he stock| market |
|00000a20| 69 73 20 65 66 66 69 63 | 69 65 6e 74 20 69 6e 2e |is effic|ient in.|
|00000a30| 2e 2e 20 20 01 00 65 00 | 00 00 00 00 00 00 00 00 |.. ..e.|........|
|00000a40| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000a50| 01 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000a60| 00 00 00 00 00 00 00 00 | 00 00 00 00 31 1a 00 57 |........|....1..W|
|00000a70| 68 69 63 68 20 6f 66 20 | 74 68 65 20 66 6f 6c 6c |hich of |the foll|
|00000a80| 6f 77 69 6e 67 20 64 6f | 65 73 20 4e 4f 54 2e 2e |owing do|es NOT..|
|00000a90| 2e 20 20 20 20 20 20 01 | 00 65 00 00 00 00 00 00 |. .|.e......|
|00000aa0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000ab0| 00 00 00 01 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000ac0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 31 |........|.......1|
|00000ad0| 1b 00 54 68 65 20 74 72 | 75 65 20 72 69 73 6b 20 |..The tr|ue risk |
|00000ae0| 6f 66 20 61 6e 79 20 69 | 6e 76 65 73 74 6d 65 6e |of any i|nvestmen|
|00000af0| 74 20 69 73 2e 2e 2e 20 | 20 20 01 00 65 00 00 00 |t is... | ..e...|
|00000b00| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000b10| 00 00 00 00 00 00 01 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000b20| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000b30| 00 00 31 1c 00 57 68 69 | 63 68 20 6f 66 20 74 68 |..1..Whi|ch of th|
|00000b40| 65 20 66 6f 6c 6c 6f 77 | 69 6e 67 20 69 73 20 61 |e follow|ing is a|
|00000b50| 20 63 6f 72 72 65 63 74 | 2e 2e 2e 20 20 01 00 65 | correct|... ..e|
|00000b60| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000b70| 00 00 00 00 00 00 00 00 | 00 01 00 00 00 00 00 00 |........|........|
|00000b80| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000b90| 00 00 00 00 00 31 1d 00 | 44 69 76 65 72 73 69 66 |.....1..|Diversif|
|00000ba0| 69 63 61 74 69 6f 6e 20 | 77 6f 72 6b 73 20 62 65 |ication |works be|
|00000bb0| 63 61 75 73 65 49 2e 2e | 2e 2e 20 20 20 20 20 20 |causeI..|.. |
|00000bc0| 01 00 65 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |..e.....|........|
|00000bd0| 00 00 00 00 00 00 00 00 | 00 00 00 00 01 00 00 00 |........|........|
|00000be0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000bf0| 00 00 00 00 00 00 00 00 | 31 1e 00 55 6e 73 79 73 |........|1..Unsys|
|00000c00| 74 65 6d 61 74 69 63 20 | 72 69 73 6b 20 69 73 20 |tematic |risk is |
|00000c10| 61 6c 73 6f 20 6b 6e 6f | 77 6e 20 61 73 2e 2e 2e |also kno|wn as...|
|00000c20| 20 20 20 01 00 65 00 00 | 00 00 00 00 00 00 00 00 | ..e..|........|
|00000c30| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 01 |........|........|
|00000c40| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000c50| 00 00 00 00 00 00 00 00 | 00 00 00 31 1f 00 53 79 |........|...1..Sy|
|00000c60| 73 74 65 6d 61 74 69 63 | 20 72 69 73 6b 20 69 73 |stematic| risk is|
|00000c70| 20 63 6f 6e 73 69 64 65 | 72 65 64 2e 2e 2e 20 20 | conside|red... |
|00000c80| 20 20 20 20 20 20 01 00 | 65 00 00 00 00 00 00 00 | ..|e.......|
|00000c90| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000ca0| 00 00 01 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000cb0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 31 20 |........|......1 |
|00000cc0| 00 57 68 69 63 68 20 6f | 66 20 74 68 65 20 66 6f |.Which o|f the fo|
|00000cd0| 6c 6c 6f 77 69 6e 67 20 | 69 73 20 74 72 75 65 2e |llowing |is true.|
|00000ce0| 2e 2e 20 20 20 20 20 20 | 20 01 00 65 00 00 00 00 |.. | ..e....|
|00000cf0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000d00| 00 00 00 00 00 01 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000d10| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000d20| 00 31 21 00 49 6e 76 65 | 73 74 6f 72 20 61 63 74 |.1!.Inve|stor act|
|00000d30| 69 76 69 74 79 20 61 6e | 64 20 74 68 65 20 69 6d |ivity an|d the im|
|00000d40| 70 61 63 74 20 6f 66 2e | 2e 2e 20 20 01 00 65 00 |pact of.|.. ..e.|
|00000d50| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000d60| 00 00 00 00 00 00 00 00 | 01 00 00 00 00 00 00 00 |........|........|
|00000d70| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000d80| 00 00 00 00 31 22 00 54 | 68 65 20 43 41 50 4d 20 |....1".T|he CAPM |
|00000d90| 73 68 6f 77 73 20 74 68 | 61 74 20 74 68 65 20 65 |shows th|at the e|
|00000da0| 78 70 65 63 74 65 64 2e | 2e 2e 20 20 20 20 20 01 |xpected.|.. .|
|00000db0| 00 65 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |.e......|........|
|00000dc0| 00 00 00 00 00 00 00 00 | 00 00 00 01 00 00 00 00 |........|........|
|00000dd0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000de0| 00 00 00 00 00 00 00 31 | 23 00 57 68 69 63 68 20 |.......1|#.Which |
|00000df0| 6f 66 20 74 68 65 20 66 | 6f 6c 6c 6f 77 69 6e 67 |of the f|ollowing|
|00000e00| 20 69 73 20 74 72 75 65 | 20 61 62 6f 75 74 2e 2e | is true| about..|
|00000e10| 2e 20 01 00 65 00 00 00 | 00 00 00 00 00 00 00 00 |. ..e...|........|
|00000e20| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 01 00 |........|........|
|00000e30| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000e40| 00 00 00 00 00 00 00 00 | 00 00 31 24 00 54 68 65 |........|..1$.The|
|00000e50| 20 61 70 70 72 6f 70 72 | 69 61 74 65 20 64 69 73 | appropr|iate dis|
|00000e60| 63 6f 75 6e 74 20 72 61 | 74 65 20 6f 6e 20 61 2e |count ra|te on a.|
|00000e70| 2e 2e 20 20 20 01 00 65 | 00 00 00 00 00 00 00 00 |.. ..e|........|
|00000e80| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000e90| 00 01 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000ea0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 31 25 00 |........|.....1%.|
|00000eb0| 59 6f 75 20 61 72 65 20 | 6c 6f 6f 6b 69 6e 67 20 |You are |looking |
|00000ec0| 61 74 20 74 77 6f 20 64 | 69 66 66 65 72 65 6e 74 |at two d|ifferent|
|00000ed0| 2e 2e 2e 20 20 20 20 20 | 01 00 65 00 00 00 00 00 |... |..e.....|
|00000ee0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000ef0| 00 00 00 00 01 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000f00| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000f10| 31 26 00 49 66 20 45 28 | 52 69 29 20 69 73 20 74 |1&.If E(|Ri) is t|
|00000f20| 68 65 20 65 78 70 65 63 | 74 65 64 20 72 65 74 75 |he expec|ted retu|
|00000f30| 72 6e 20 6f 6e 2e 2e 2e | 20 20 20 01 00 65 00 00 |rn on...| ..e..|
|00000f40| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000f50| 00 00 00 00 00 00 00 01 | 00 00 00 00 00 00 00 00 |........|........|
|00000f60| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000f70| 00 00 00 31 27 00 57 68 | 69 63 68 20 6f 66 20 74 |...1'.Wh|ich of t|
|00000f80| 68 65 20 66 6f 6c 6c 6f | 77 69 6e 67 20 64 6f 65 |he follo|wing doe|
|00000f90| 73 20 4e 4f 54 2e 2e 2e | 20 20 20 20 20 20 01 00 |s NOT...| ..|
|00000fa0| 65 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |e.......|........|
|00000fb0| 00 00 00 00 00 00 00 00 | 00 00 01 00 00 00 00 00 |........|........|
|00000fc0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00000fd0| 00 00 00 00 00 00 31 28 | 00 59 6f 75 20 6f 77 6e |......1(|.You own|
|00000fe0| 20 61 20 73 65 63 75 72 | 69 74 79 20 74 68 61 74 | a secur|ity that|
|00000ff0| 20 70 61 79 73 20 6e 6f | 2e 2e 2e 20 20 20 20 20 | pays no|... |
|00001000| 20 01 00 65 00 00 00 00 | 00 00 00 00 00 00 00 00 | ..e....|........|
|00001010| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 01 00 00 |........|........|
|00001020| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001030| 00 00 00 00 00 00 00 00 | 00 31 29 00 57 68 69 63 |........|.1).Whic|
|00001040| 68 20 6f 66 20 74 68 65 | 20 66 6f 6c 6c 6f 77 69 |h of the| followi|
|00001050| 6e 67 20 64 65 73 63 72 | 69 62 65 28 73 29 20 61 |ng descr|ibe(s) a|
|00001060| 2e 2e 2e 20 01 00 65 00 | 00 00 00 00 00 00 00 00 |... ..e.|........|
|00001070| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001080| 01 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001090| 00 00 00 00 00 00 00 00 | 00 00 00 00 31 2a 00 57 |........|....1*.W|
|000010a0| 68 69 63 68 20 6f 66 20 | 74 68 65 20 66 6f 6c 6c |hich of |the foll|
|000010b0| 6f 77 69 6e 67 20 73 74 | 61 74 65 6d 65 6e 74 73 |owing st|atements|
|000010c0| 20 69 73 2e 2e 2e 20 01 | 00 65 00 00 00 00 00 00 | is... .|.e......|
|000010d0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000010e0| 00 00 00 01 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000010f0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 31 |........|.......1|
|00001100| 2b 00 41 6e 73 77 65 72 | 20 74 68 65 20 66 6f 6c |+.Answer| the fol|
|00001110| 6c 6f 77 69 6e 67 20 74 | 77 6f 20 71 75 65 73 74 |lowing t|wo quest|
|00001120| 69 6f 6e 73 2e 2e 2e 20 | 20 20 01 00 65 00 00 00 |ions... | ..e...|
|00001130| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001140| 00 00 00 00 00 00 01 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001150| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001160| 00 00 31 2c 00 57 68 69 | 63 68 20 28 6f 6e 65 20 |..1,.Whi|ch (one |
|00001170| 6f 72 20 6d 6f 72 65 29 | 20 6f 66 20 74 68 65 20 |or more)| of the |
|00001180| 66 6f 6c 6c 6f 77 69 6e | 67 2e 2e 2e 20 01 00 65 |followin|g... ..e|
|00001190| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000011a0| 00 00 00 00 00 00 00 00 | 00 01 00 00 00 00 00 00 |........|........|
|000011b0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000011c0| 00 00 00 00 00 31 2d 00 | 57 68 69 63 68 20 28 6f |.....1-.|Which (o|
|000011d0| 6e 65 20 6f 72 20 6d 6f | 72 65 29 20 6f 66 20 74 |ne or mo|re) of t|
|000011e0| 68 65 20 66 6f 6c 6c 6f | 77 69 6e 67 2e 2e 2e 20 |he follo|wing... |
|000011f0| 01 00 65 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |..e.....|........|
|00001200| 00 00 00 00 00 00 00 00 | 00 00 00 00 01 00 00 00 |........|........|
|00001210| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001220| 00 00 00 00 00 00 00 00 | 31 2e 00 41 6c 6c 20 65 |........|1..All e|
|00001230| 6c 73 65 20 65 71 75 61 | 6c 2c 20 61 63 74 69 6f |lse equa|l, actio|
|00001240| 6e 73 20 6f 72 20 65 76 | 65 6e 74 73 2e 2e 2e 20 |ns or ev|ents... |
|00001250| 20 20 20 01 00 65 00 00 | 00 00 00 00 00 00 00 00 | ..e..|........|
|00001260| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 01 |........|........|
|00001270| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001280| 00 00 00 00 00 00 00 00 | 00 00 00 31 2f 00 54 6f |........|...1/.To|
|00001290| 74 61 6c 20 72 69 73 6b | 20 65 71 75 61 6c 73 20 |tal risk| equals |
|000012a0| 54 6f 74 61 6c 20 72 69 | 73 6b 20 65 71 75 61 6c |Total ri|sk equal|
|000012b0| 73 20 20 20 20 20 01 00 | 65 00 00 00 00 00 00 00 |s ..|e.......|
|000012c0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000012d0| 00 00 01 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000012e0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 31 30 |........|......10|
|000012f0| 00 59 6f 75 20 68 61 76 | 65 20 61 20 70 6f 72 74 |.You hav|e a port|
|00001300| 66 6f 6c 69 6f 20 63 6f | 6e 73 69 73 74 69 6e 67 |folio co|nsisting|
|00001310| 20 6f 66 2e 2e 2e 20 20 | 20 01 00 65 00 00 00 00 | of... | ..e....|
|00001320| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001330| 00 00 00 00 00 01 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001340| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001350| 00 31 31 00 59 6f 75 20 | 68 61 76 65 20 61 20 70 |.11.You |have a p|
|00001360| 6f 72 74 66 6f 6c 69 6f | 20 63 6f 6e 73 69 73 74 |ortfolio| consist|
|00001370| 69 6e 67 20 6f 66 2e 2e | 2e 20 20 20 01 00 65 00 |ing of..|. ..e.|
|00001380| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001390| 00 00 00 00 00 00 00 00 | 01 00 00 00 00 00 00 00 |........|........|
|000013a0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000013b0| 00 00 00 00 31 32 00 57 | 68 69 63 68 20 6f 66 20 |....12.W|hich of |
|000013c0| 74 68 65 20 66 6f 6c 6c | 6f 77 69 6e 67 20 77 6f |the foll|owing wo|
|000013d0| 75 6c 64 20 68 61 76 65 | 20 74 68 65 2e 2e 2e 01 |uld have| the....|
|000013e0| 00 65 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |.e......|........|
|000013f0| 00 00 00 00 00 00 00 00 | 00 00 00 01 00 00 00 00 |........|........|
|00001400| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001410| 00 00 00 00 00 00 00 00 | 00 00 00 31 33 00 57 68 |........|...13.Wh|
|00001420| 69 63 68 20 6f 66 20 74 | 68 65 20 66 6f 6c 6c 6f |ich of t|he follo|
|00001430| 77 69 6e 67 20 77 6f 75 | 6c 64 20 69 6e 63 72 65 |wing wou|ld incre|
|00001440| 61 73 65 2e 2e 2e 01 00 | 65 00 00 00 00 00 00 00 |ase.....|e.......|
|00001450| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001460| 00 00 01 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001470| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 31 34 |........|......14|
|00001480| 00 59 6f 75 20 73 65 6c | 6c 20 73 6f 6d 65 20 6f |.You sel|l some o|
|00001490| 66 20 79 6f 75 72 20 49 | 42 4d 20 63 6f 6d 6d 6f |f your I|BM commo|
|000014a0| 6e 2e 2e 2e 20 20 20 20 | 20 01 00 65 00 00 00 00 |n... | ..e....|
|000014b0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000014c0| 00 00 00 00 00 01 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000014d0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000014e0| 00 31 35 00 59 6f 75 72 | 20 66 69 72 6d 27 73 20 |.15.Your| firm's |
|000014f0| 63 6f 6d 6d 6f 6e 20 73 | 74 6f 63 6b 20 68 61 73 |common s|tock has|
|00001500| 20 61 20 62 65 74 61 2e | 2e 2e 20 20 01 00 65 00 | a beta.|.. ..e.|
|00001510| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001520| 00 00 00 00 00 00 00 00 | 01 00 00 00 00 00 00 00 |........|........|
|00001530| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001540| 00 00 00 00 31 36 00 41 | 7a 69 7a 20 45 71 75 69 |....16.A|ziz Equi|
|00001550| 70 6d 65 6e 74 20 43 6f | 2e 20 69 6e 76 65 73 74 |pment Co|. invest|
|00001560| 73 20 69 6e 20 61 20 67 | 72 6f 75 70 2e 2e 2e 01 |s in a g|roup....|
|00001570| 00 65 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |.e......|........|
|00001580| 00 00 00 00 00 00 00 00 | 00 00 00 01 00 00 00 00 |........|........|
|00001590| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000015a0| 00 00 00 00 00 00 00 31 | 37 00 57 68 65 6e 20 63 |.......1|7.When c|
|000015b0| 6f 6d 70 75 74 69 6e 67 | 20 74 68 65 20 65 78 70 |omputing| the exp|
|000015c0| 65 63 74 65 64 20 72 65 | 74 75 72 6e 20 6f 6e 2e |ected re|turn on.|
|000015d0| 2e 2e 01 00 65 00 00 00 | 00 00 00 00 00 00 00 00 |....e...|........|
|000015e0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 01 00 |........|........|
|000015f0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001600| 00 00 00 00 00 00 00 00 | 00 00 31 38 00 57 68 69 |........|..18.Whi|
|00001610| 63 68 20 6f 66 20 74 68 | 65 20 66 6f 6c 6c 6f 77 |ch of th|e follow|
|00001620| 69 6e 67 20 73 74 61 74 | 65 6d 65 6e 74 73 2e 2e |ing stat|ements..|
|00001630| 2e 20 20 20 20 01 00 65 | 00 00 00 00 00 00 00 00 |. ..e|........|
|00001640| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001650| 00 01 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001660| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 31 39 00 |........|.....19.|
|00001670| 57 68 69 63 68 20 6f 66 | 20 74 68 65 20 66 6f 6c |Which of| the fol|
|00001680| 6c 6f 77 69 6e 67 20 73 | 74 61 74 65 6d 65 6e 74 |lowing s|tatement|
|00001690| 73 20 69 73 2e 2e 2e 20 | 01 00 65 00 00 00 00 00 |s is... |..e.....|
|000016a0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000016b0| 00 00 00 00 01 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000016c0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000016d0| 31 3a 00 45 64 20 4c 61 | 77 72 65 6e 63 65 20 68 |1:.Ed La|wrence h|
|000016e0| 61 73 20 24 31 30 30 2c | 30 30 30 20 69 6e 76 65 |as $100,|000 inve|
|000016f0| 73 74 65 64 2e 20 2e 2e | 2e 20 20 01 00 65 00 00 |sted. ..|. ..e..|
|00001700| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001710| 00 00 00 00 00 00 00 01 | 00 00 00 00 00 00 00 00 |........|........|
|00001720| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001730| 00 00 00 31 3b 00 54 68 | 65 20 72 65 74 75 72 6e |...1;.Th|e return|
|00001740| 20 61 6e 74 69 63 69 70 | 61 74 65 64 20 6f 6e 20 | anticip|ated on |
|00001750| 61 20 72 69 73 6b 79 2e | 2e 2e 20 20 20 20 01 00 |a risky.|.. ..|
|00001760| 65 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |e.......|........|
|00001770| 00 00 00 00 00 00 00 00 | 00 00 01 00 00 00 00 00 |........|........|
|00001780| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001790| 00 00 00 00 00 00 31 3c | 00 54 68 65 20 5f 5f 5f |......1<|.The ___|
|000017a0| 5f 5f 5f 5f 20 72 65 74 | 75 72 6e 20 69 73 20 74 |____ ret|urn is t|
|000017b0| 68 61 74 20 70 6f 72 74 | 69 6f 6e 20 6f 66 2e 2e |hat port|ion of..|
|000017c0| 2e 01 00 65 00 00 00 00 | 00 00 00 00 00 00 00 00 |...e....|........|
|000017d0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 01 00 00 |........|........|
|000017e0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000017f0| 00 00 00 00 00 00 00 00 | 00 31 3d 00 54 68 65 20 |........|.1=.The |
|00001800| 5f 5f 5f 5f 5f 5f 5f 5f | 5f 20 70 6f 72 74 69 6f |________|_ portio|
|00001810| 6e 20 6f 66 20 74 68 65 | 20 74 6f 74 61 6c 2e 2e |n of the| total..|
|00001820| 2e 20 20 20 01 00 65 00 | 00 00 00 00 00 00 00 00 |. ..e.|........|
|00001830| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001840| 01 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001850| 00 00 00 00 00 00 00 00 | 00 00 00 00 31 3e 00 42 |........|....1>.B|
|00001860| 72 61 64 79 20 4c 61 64 | 79 20 43 6f 73 6d 65 74 |rady Lad|y Cosmet|
|00001870| 69 63 73 20 6a 75 73 74 | 20 61 6e 6e 6f 75 6e 63 |ics just| announc|
|00001880| 65 64 2e 2e 2e 20 20 01 | 00 65 00 00 00 00 00 00 |ed... .|.e......|
|00001890| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000018a0| 00 00 00 01 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000018b0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 31 |........|.......1|
|000018c0| 3f 00 57 68 69 63 68 20 | 6f 66 20 74 68 65 20 66 |?.Which |of the f|
|000018d0| 6f 6c 6c 6f 77 69 6e 67 | 20 70 61 69 72 73 20 6f |ollowing| pairs o|
|000018e0| 66 20 74 65 72 6d 73 2e | 2e 2e 01 00 65 00 00 00 |f terms.|....e...|
|000018f0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001900| 00 00 00 00 00 00 01 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001910| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001920| 00 00 31 40 00 54 68 65 | 20 73 74 6f 63 6b 20 70 |..1@.The| stock p|
|00001930| 72 69 63 65 20 6f 66 20 | 61 20 67 6f 6c 64 2d 6d |rice of |a gold-m|
|00001940| 69 6e 69 6e 67 20 66 69 | 72 6d 2e 2e 2e 01 00 65 |ining fi|rm.....e|
|00001950| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001960| 00 00 00 00 00 00 00 00 | 00 01 00 00 00 00 00 00 |........|........|
|00001970| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001980| 00 00 00 00 00 31 41 00 | 57 68 69 63 68 20 6f 66 |.....1A.|Which of|
|00001990| 20 74 68 65 20 66 6f 6c | 6c 6f 77 69 6e 67 20 70 | the fol|lowing p|
|000019a0| 61 69 72 73 20 6f 66 20 | 74 65 72 6d 73 2e 2e 2e |airs of |terms...|
|000019b0| 01 00 65 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |..e.....|........|
|000019c0| 00 00 00 00 00 00 00 00 | 00 00 00 00 01 00 00 00 |........|........|
|000019d0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000019e0| 00 00 00 00 00 00 00 00 | 31 42 00 42 79 20 73 70 |........|1B.By sp|
|000019f0| 72 65 61 64 69 6e 67 20 | 6f 75 72 20 69 6e 76 65 |reading |our inve|
|00001a00| 73 74 6d 65 6e 74 20 66 | 75 6e 64 73 2e 2e 2e 20 |stment f|unds... |
|00001a10| 20 20 20 01 00 65 00 00 | 00 00 00 00 00 00 00 00 | ..e..|........|
|00001a20| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 01 |........|........|
|00001a30| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001a40| 00 00 00 00 00 00 00 00 | 00 00 00 31 43 00 4e 6f |........|...1C.No|
|00001a50| 20 6d 61 74 74 65 72 20 | 68 6f 77 20 6d 61 6e 79 | matter |how many|
|00001a60| 20 72 69 73 6b 79 20 61 | 73 73 65 74 73 20 77 65 | risky a|ssets we|
|00001a70| 2e 2e 2e 20 20 20 01 00 | 65 00 00 00 00 00 00 00 |... ..|e.......|
|00001a80| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001a90| 00 00 01 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001aa0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 31 44 |........|......1D|
|00001ab0| 00 57 68 69 63 68 20 6f | 66 20 74 68 65 20 66 6f |.Which o|f the fo|
|00001ac0| 6c 6c 6f 77 69 6e 67 20 | 69 73 20 69 6e 63 6f 72 |llowing |is incor|
|00001ad0| 72 65 63 74 3f 2e 2e 2e | 20 01 00 65 00 00 00 00 |rect?...| ..e....|
|00001ae0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001af0| 00 00 00 00 00 01 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001b00| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001b10| 00 31 45 00 41 63 63 6f | 72 64 69 6e 67 20 74 6f |.1E.Acco|rding to|
|00001b20| 20 74 68 65 20 73 79 73 | 74 65 6d 61 74 69 63 20 | the sys|tematic |
|00001b30| 72 69 73 6b 2e 2e 2e 20 | 20 20 20 20 01 00 65 00 |risk... | ..e.|
|00001b40| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001b50| 00 00 00 00 00 00 00 00 | 01 00 00 00 00 00 00 00 |........|........|
|00001b60| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001b70| 00 00 00 00 31 46 00 41 | 6e 20 61 73 73 65 74 27 |....1F.A|n asset'|
|00001b80| 73 20 75 6e 64 69 76 65 | 72 73 69 66 69 61 62 6c |s undive|rsifiabl|
|00001b90| 65 20 72 69 73 6b 20 69 | 73 2e 2e 2e 20 20 20 01 |e risk i|s... .|
|00001ba0| 00 65 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |.e......|........|
|00001bb0| 00 00 00 00 00 00 00 00 | 00 00 00 01 00 00 00 00 |........|........|
|00001bc0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001bd0| 00 00 00 00 00 00 00 31 | 47 00 57 68 61 74 20 69 |.......1|G.What i|
|00001be0| 73 20 74 68 65 20 65 78 | 70 65 63 74 65 64 20 72 |s the ex|pected r|
|00001bf0| 65 74 75 72 6e 20 66 6f | 72 20 74 68 65 2e 2e 2e |eturn fo|r the...|
|00001c00| 20 20 01 00 65 00 00 00 | 00 00 00 00 00 00 00 00 | ..e...|........|
|00001c10| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 01 00 |........|........|
|00001c20| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001c30| 00 00 00 00 00 00 00 00 | 00 00 31 48 00 57 68 61 |........|..1H.Wha|
|00001c40| 74 20 69 73 20 74 68 65 | 20 72 69 73 6b 20 70 72 |t is the| risk pr|
|00001c50| 65 6d 69 75 6d 20 6f 6e | 20 74 68 65 2e 2e 2e 20 |emium on| the... |
|00001c60| 20 20 20 20 20 01 00 65 | 00 00 00 00 00 00 00 00 | ..e|........|
|00001c70| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001c80| 00 01 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001c90| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 31 49 00 |........|.....1I.|
|00001ca0| 57 68 61 74 20 69 73 20 | 74 68 65 20 65 78 70 65 |What is |the expe|
|00001cb0| 63 74 65 64 20 72 65 74 | 75 72 6e 20 6f 6e 20 61 |cted ret|urn on a|
|00001cc0| 73 73 65 74 2e 2e 2e 20 | 01 00 65 00 00 00 00 00 |sset... |..e.....|
|00001cd0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001ce0| 00 00 00 00 01 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001cf0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001d00| 31 4a 00 57 68 61 74 20 | 69 73 20 74 68 65 20 65 |1J.What |is the e|
|00001d10| 78 70 65 63 74 65 64 20 | 6d 61 72 6b 65 74 20 72 |xpected |market r|
|00001d20| 65 74 75 72 6e 20 69 66 | 2e 2e 2e 01 00 65 00 00 |eturn if|.....e..|
|00001d30| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001d40| 00 00 00 00 00 00 00 01 | 00 00 00 00 00 00 00 00 |........|........|
|00001d50| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001d60| 00 00 00 31 4b 00 41 73 | 73 65 74 20 41 20 68 61 |...1K.As|set A ha|
|00001d70| 73 20 61 6e 20 65 78 70 | 65 63 74 65 64 20 72 65 |s an exp|ected re|
|00001d80| 74 75 72 6e 20 6f 66 2e | 2e 2e 20 20 20 20 01 00 |turn of.|.. ..|
|00001d90| 65 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |e.......|........|
|00001da0| 00 00 00 00 00 00 00 00 | 00 00 01 00 00 00 00 00 |........|........|
|00001db0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001dc0| 00 00 00 00 00 00 31 4c | 00 41 73 73 65 74 20 41 |......1L|.Asset A|
|00001dd0| 20 68 61 73 20 61 6e 20 | 65 78 70 65 63 74 65 64 | has an |expected|
|00001de0| 20 72 65 74 75 72 6e 20 | 6f 66 20 32 32 25 2e 2e | return |of 22%..|
|00001df0| 2e 01 00 65 00 00 00 00 | 00 00 00 00 00 00 00 00 |...e....|........|
|00001e00| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 01 00 00 |........|........|
|00001e10| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001e20| 00 00 00 00 00 00 00 00 | 00 31 4d 00 41 73 73 65 |........|.1M.Asse|
|00001e30| 74 20 41 20 68 61 73 20 | 61 6e 20 65 78 70 65 63 |t A has |an expec|
|00001e40| 74 65 64 20 72 65 74 75 | 72 6e 20 6f 66 20 31 32 |ted retu|rn of 12|
|00001e50| 25 2e 2e 2e 01 00 65 00 | 00 00 00 00 00 00 00 00 |%.....e.|........|
|00001e60| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001e70| 01 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001e80| 00 00 00 00 00 00 00 00 | 00 00 00 00 31 4e 00 53 |........|....1N.S|
|00001e90| 75 70 70 6f 73 65 20 79 | 6f 75 20 68 61 76 65 20 |uppose y|ou have |
|00001ea0| 61 20 70 6f 72 74 66 6f | 6c 69 6f 2e 2e 2e 20 20 |a portfo|lio... |
|00001eb0| 20 20 20 20 20 20 20 01 | 00 65 00 00 00 00 00 00 | .|.e......|
|00001ec0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001ed0| 00 00 00 01 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001ee0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 31 |........|.......1|
|00001ef0| 4f 00 57 68 61 74 20 69 | 73 20 74 68 65 20 70 6f |O.What i|s the po|
|00001f00| 72 74 66 6f 6c 69 6f 20 | 62 65 74 61 20 77 69 74 |rtfolio |beta wit|
|00001f10| 68 20 37 35 25 2e 2e 2e | 20 20 01 00 65 00 00 00 |h 75%...| ..e...|
|00001f20| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001f30| 00 00 00 00 00 00 01 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001f40| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001f50| 00 00 31 50 00 57 68 61 | 74 20 69 73 20 74 68 65 |..1P.Wha|t is the|
|00001f60| 20 70 6f 72 74 66 6f 6c | 69 6f 20 62 65 74 61 20 | portfol|io beta |
|00001f70| 77 69 74 68 20 31 32 35 | 25 2e 2e 2e 20 01 00 65 |with 125|%... ..e|
|00001f80| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001f90| 00 00 00 00 00 00 00 00 | 00 01 00 00 00 00 00 00 |........|........|
|00001fa0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00001fb0| 00 00 00 00 00 31 51 00 | 57 68 61 74 20 69 73 20 |.....1Q.|What is |
|00001fc0| 74 68 65 20 70 6f 72 74 | 66 6f 6c 69 6f 20 62 65 |the port|folio be|
|00001fd0| 74 61 20 77 69 74 68 20 | 32 35 25 2e 2e 2e 20 20 |ta with |25%... |
|00001fe0| 01 00 65 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |..e.....|........|
|00001ff0| 00 00 00 00 00 00 00 00 | 00 00 00 00 01 00 00 00 |........|........|
|00002000| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002010| 00 00 00 00 00 00 00 00 | 31 52 00 57 68 61 74 20 |........|1R.What |
|00002020| 69 73 20 74 68 65 20 70 | 6f 72 74 66 6f 6c 69 6f |is the p|ortfolio|
|00002030| 20 62 65 74 61 20 74 68 | 61 74 20 68 61 73 2e 2e | beta th|at has..|
|00002040| 2e 20 20 01 00 65 00 00 | 00 00 00 00 00 00 00 00 |. ..e..|........|
|00002050| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 01 |........|........|
|00002060| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002070| 00 00 00 00 00 00 00 00 | 00 00 00 31 53 00 59 6f |........|...1S.Yo|
|00002080| 75 20 68 6f 6c 64 20 74 | 68 72 65 65 20 73 74 6f |u hold t|hree sto|
|00002090| 63 6b 73 20 69 6e 20 79 | 6f 75 72 2e 2e 2e 20 20 |cks in y|our... |
|000020a0| 20 20 20 20 20 20 01 00 | 65 00 00 00 00 00 00 00 | ..|e.......|
|000020b0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000020c0| 00 00 01 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000020d0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 31 54 |........|......1T|
|000020e0| 00 50 6f 72 74 20 43 6f | 6d 70 61 6e 79 20 68 61 |.Port Co|mpany ha|
|000020f0| 73 20 74 68 72 65 65 20 | 64 69 76 69 73 69 6f 6e |s three |division|
|00002100| 73 2e 20 2e 2e 2e 20 20 | 20 01 00 65 00 00 00 00 |s. ... | ..e....|
|00002110| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002120| 00 00 00 00 00 01 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002130| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002140| 00 31 55 00 41 73 73 65 | 74 20 41 20 68 61 73 20 |.1U.Asse|t A has |
|00002150| 61 20 72 65 77 61 72 64 | 20 74 6f 20 72 69 73 6b |a reward| to risk|
|00002160| 20 72 61 74 69 6f 20 6f | 66 2e 2e 2e 01 00 65 00 | ratio o|f.....e.|
|00002170| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002180| 00 00 00 00 00 00 00 00 | 01 00 00 00 00 00 00 00 |........|........|
|00002190| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000021a0| 00 00 00 00 31 56 00 59 | 6f 75 20 6f 77 6e 20 74 |....1V.Y|ou own t|
|000021b0| 77 6f 20 72 69 73 6b 79 | 20 61 73 73 65 74 73 2c |wo risky| assets,|
|000021c0| 20 62 6f 74 68 20 6f 66 | 2e 2e 2e 20 20 20 20 01 | both of|... .|
|000021d0| 00 65 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |.e......|........|
|000021e0| 00 00 00 00 00 00 00 00 | 00 00 00 01 00 00 00 00 |........|........|
|000021f0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002200| 00 00 00 00 00 00 00 31 | 57 00 57 68 69 63 68 20 |.......1|W.Which |
|00002210| 6f 66 20 74 68 65 20 66 | 6f 6c 6c 6f 77 69 6e 67 |of the f|ollowing|
|00002220| 20 69 73 20 4e 4f 54 2e | 2e 2e 20 20 20 20 20 20 | is NOT.|.. |
|00002230| 20 20 01 00 65 00 00 00 | 00 00 00 00 00 00 00 00 | ..e...|........|
|00002240| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 01 00 |........|........|
|00002250| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002260| 00 00 00 00 00 00 00 00 | 00 00 31 58 00 43 6f 6e |........|..1X.Con|
|00002270| 73 69 64 65 72 20 74 68 | 65 20 66 6f 6c 6c 6f 77 |sider th|e follow|
|00002280| 69 6e 67 3a 20 74 68 65 | 20 72 69 73 6b 20 66 72 |ing: the| risk fr|
|00002290| 65 65 2e 2e 2e 01 00 65 | 00 00 00 00 00 00 00 00 |ee.....e|........|
|000022a0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000022b0| 00 01 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000022c0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 31 59 00 |........|.....1Y.|
|000022d0| 57 68 69 63 68 20 6f 66 | 20 74 68 65 20 66 6f 6c |Which of| the fol|
|000022e0| 6c 6f 77 69 6e 67 20 69 | 73 20 63 6f 72 72 65 63 |lowing i|s correc|
|000022f0| 74 2e 2e 2e 20 20 20 20 | 01 00 65 00 00 00 00 00 |t... |..e.....|
|00002300| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002310| 00 00 00 00 01 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002320| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002330| 31 5a 00 57 68 69 63 68 | 20 6f 66 20 74 68 65 20 |1Z.Which| of the |
|00002340| 66 6f 6c 6c 6f 77 69 6e | 67 20 69 73 20 63 6f 72 |followin|g is cor|
|00002350| 72 65 63 74 3f 2e 2e 2e | 20 20 20 01 00 65 00 00 |rect?...| ..e..|
|00002360| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002370| 00 00 00 00 00 00 00 01 | 00 00 00 00 00 00 00 00 |........|........|
|00002380| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002390| 00 00 00 31 5b 00 41 73 | 73 65 74 20 41 2c 20 77 |...1[.As|set A, w|
|000023a0| 68 69 63 68 20 68 61 73 | 20 61 6e 20 65 78 70 65 |hich has| an expe|
|000023b0| 63 74 65 64 20 72 65 74 | 75 72 6e 2e 2e 2e 01 00 |cted ret|urn.....|
|000023c0| 65 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |e.......|........|
|000023d0| 00 00 00 00 00 00 00 00 | 00 00 01 00 00 00 00 00 |........|........|
|000023e0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000023f0| 00 00 00 00 00 00 31 5c | 00 59 6f 75 20 68 6f 6c |......1\|.You hol|
|00002400| 64 20 66 6f 75 72 20 73 | 74 6f 63 6b 73 20 69 6e |d four s|tocks in|
|00002410| 20 79 6f 75 72 2e 2e 2e | 20 20 20 20 20 20 20 20 | your...| |
|00002420| 20 01 00 65 00 00 00 00 | 00 00 00 00 00 00 00 00 | ..e....|........|
|00002430| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 01 00 00 |........|........|
|00002440| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002450| 00 00 00 00 00 00 00 00 | 00 31 5d 00 57 68 61 74 |........|.1].What|
|00002460| 20 69 73 20 74 68 65 20 | 62 65 74 61 20 6f 66 20 | is the |beta of |
|00002470| 61 20 70 6f 72 74 66 6f | 6c 69 6f 20 6d 61 64 65 |a portfo|lio made|
|00002480| 2e 2e 2e 20 01 00 65 00 | 00 00 00 00 00 00 00 00 |... ..e.|........|
|00002490| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000024a0| 01 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000024b0| 00 00 00 00 00 00 00 00 | 00 00 00 00 31 5e 00 59 |........|....1^.Y|
|000024c0| 6f 75 20 66 6f 72 6d 20 | 61 20 70 6f 72 74 66 6f |ou form |a portfo|
|000024d0| 6c 69 6f 20 62 79 20 69 | 6e 76 65 73 74 69 6e 67 |lio by i|nvesting|
|000024e0| 2e 2e 2e 20 20 20 20 01 | 00 65 00 00 00 00 00 00 |... .|.e......|
|000024f0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002500| 00 00 00 01 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002510| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 31 |........|.......1|
|00002520| 5f 00 53 65 63 75 72 69 | 74 79 20 58 20 68 61 73 |_.Securi|ty X has|
|00002530| 20 61 20 73 74 61 6e 64 | 61 72 64 20 64 65 76 69 | a stand|ard devi|
|00002540| 61 74 69 6f 6e 2e 2e 2e | 20 20 01 00 65 00 00 00 |ation...| ..e...|
|00002550| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002560| 00 00 00 00 00 00 01 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002570| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002580| 00 00 31 60 00 53 65 63 | 75 72 69 74 79 20 58 20 |..1`.Sec|urity X |
|00002590| 68 61 73 20 61 20 73 74 | 61 6e 64 61 72 64 20 64 |has a st|andard d|
|000025a0| 65 76 69 61 74 69 6f 6e | 2e 2e 2e 20 20 01 00 65 |eviation|... ..e|
|000025b0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000025c0| 00 00 00 00 00 00 00 00 | 00 01 00 00 00 00 00 00 |........|........|
|000025d0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000025e0| 00 00 00 00 00 31 61 00 | 53 65 63 75 72 69 74 79 |.....1a.|Security|
|000025f0| 20 58 20 68 61 73 20 61 | 20 73 74 61 6e 64 61 72 | X has a| standar|
|00002600| 64 20 64 65 76 69 61 74 | 69 6f 6e 2e 2e 2e 20 20 |d deviat|ion... |
|00002610| 01 00 65 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |..e.....|........|
|00002620| 00 00 00 00 00 00 00 00 | 00 00 00 00 01 00 00 00 |........|........|
|00002630| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002640| 00 00 00 00 00 00 00 00 | 31 62 00 54 68 65 72 65 |........|1b.There|
|00002650| 20 61 72 65 20 74 77 6f | 20 65 78 70 65 63 74 65 | are two| expecte|
|00002660| 64 20 73 74 61 74 65 73 | 20 6f 66 20 74 68 65 2e |d states| of the.|
|00002670| 2e 2e 20 01 00 65 00 00 | 00 00 00 00 00 00 00 00 |.. ..e..|........|
|00002680| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 01 |........|........|
|00002690| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000026a0| 00 00 00 00 00 00 00 00 | 00 00 00 31 63 00 54 68 |........|...1c.Th|
|000026b0| 65 72 65 20 61 72 65 20 | 74 77 6f 20 65 78 70 65 |ere are |two expe|
|000026c0| 63 74 65 64 20 73 74 61 | 74 65 73 20 6f 66 20 74 |cted sta|tes of t|
|000026d0| 68 65 2e 2e 2e 20 01 00 | 65 00 00 00 00 00 00 00 |he... ..|e.......|
|000026e0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000026f0| 00 00 01 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002700| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 31 64 |........|......1d|
|00002710| 00 54 68 65 72 65 20 61 | 72 65 20 74 77 6f 20 65 |.There a|re two e|
|00002720| 78 70 65 63 74 65 64 20 | 73 74 61 74 65 73 20 6f |xpected |states o|
|00002730| 66 20 74 68 65 2e 2e 2e | 20 01 00 65 00 00 00 00 |f the...| ..e....|
|00002740| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002750| 00 00 00 00 00 01 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002760| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002770| 00 98 da 00 00 3e 28 00 | 00 5d 2a 00 00 4d 2c 00 |.....>(.|.]*..M,.|
|00002780| 00 49 2f 00 00 8e 31 00 | 00 59 33 00 00 3e 35 00 |.I/...1.|.Y3..>5.|
|00002790| 00 f5 36 00 00 30 39 00 | 00 67 3c 00 00 9c 3e 00 |..6..09.|.g<...>.|
|000027a0| 00 93 40 00 00 99 42 00 | 00 c3 44 00 00 48 47 00 |..@...B.|..D..HG.|
|000027b0| 00 8e 49 00 00 91 4b 00 | 00 86 4d 00 00 75 4f 00 |..I...K.|..M..uO.|
|000027c0| 00 91 51 00 00 85 53 00 | 00 e4 58 00 00 d3 5e 00 |..Q...S.|..X...^.|
|000027d0| 00 17 64 00 00 b2 69 00 | 00 f8 6e 00 00 68 74 00 |..d...i.|..n..ht.|
|000027e0| 00 ed 77 00 00 32 7d 00 | 00 12 81 00 00 42 84 00 |..w..2}.|.....B..|
|000027f0| 00 a9 88 00 00 cb 8c 00 | 00 3d 91 00 00 f5 94 00 |........|.=......|
|00002800| 00 07 99 00 00 0b 9d 00 | 00 c8 a1 00 00 74 a5 00 |........|.....t..|
|00002810| 00 c0 a8 00 00 73 ad 00 | 00 af b2 00 00 06 b8 00 |.....s..|........|
|00002820| 00 73 bc 00 00 85 c0 00 | 00 99 c4 00 00 78 c8 00 |.s......|.....x..|
|00002830| 00 ce cb 00 00 e7 d0 00 | 00 0d d6 00 00 33 01 00 |........|.....3..|
|00002840| 39 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |9.......|........|
|00002850| 00 00 00 00 00 00 02 00 | 02 00 14 00 7b 5c 66 6f |........|....{\fo|
|00002860| 6e 74 74 62 6c 7b 5c 66 | 30 7d 7b 5c 66 31 7d 7d |nttbl{\f|0}{\f1}}|
|00002870| 00 00 7c 00 7b 20 49 66 | 20 74 68 65 20 74 6f 74 |..|.{ If| the tot|
|00002880| 61 6c 20 72 69 73 6b 20 | 6f 66 20 66 69 72 6d 20 |al risk |of firm |
|00002890| 58 20 69 73 20 67 72 65 | 61 74 65 72 20 74 68 61 |X is gre|ater tha|
|000028a0| 6e 20 74 68 61 74 20 6f | 66 20 66 69 72 6d 20 59 |n that o|f firm Y|
|000028b0| 2c 20 74 68 65 6e 20 74 | 68 65 20 62 65 74 61 20 |, then t|he beta |
|000028c0| 6f 66 20 66 69 72 6d 20 | 58 20 6d 75 73 74 20 62 |of firm |X must b|
|000028d0| 65 20 67 72 65 61 74 65 | 72 20 74 68 61 6e 20 74 |e greate|r than t|
|000028e0| 68 61 74 20 6f 66 20 66 | 69 72 6d 20 59 2e 20 7d |hat of f|irm Y. }|
|000028f0| 08 00 7b 20 54 72 75 65 | 20 7d 09 00 7b 20 46 61 |..{ True| }..{ Fa|
|00002900| 6c 73 65 20 7d 00 00 00 | 00 00 00 9a 00 7b 5c 66 |lse }...|.....{\f|
|00002910| 6f 6e 74 74 62 6c 7b 5c | 66 30 7d 7b 5c 66 31 7d |onttbl{\|f0}{\f1}|
|00002920| 7d 7b 5c 44 46 20 42 65 | 63 61 75 73 65 20 74 6f |}{\DF Be|cause to|
|00002930| 74 61 6c 20 72 69 73 6b | 20 69 73 20 74 68 65 20 |tal risk| is the |
|00002940| 73 75 6d 20 6f 66 20 73 | 79 73 74 65 6d 61 74 69 |sum of s|ystemati|
|00002950| 63 20 61 6e 64 20 75 6e | 73 79 73 74 65 6d 61 74 |c and un|systemat|
|00002960| 69 63 20 72 69 73 6b 2c | 20 74 68 69 73 20 69 73 |ic risk,| this is|
|00002970| 20 6e 6f 74 20 6e 65 63 | 65 73 73 61 72 69 6c 79 | not nec|essarily|
|00002980| 20 74 72 75 65 2e 20 52 | 65 76 69 65 77 20 73 65 | true. R|eview se|
|00002990| 63 74 69 6f 6e 73 20 31 | 33 2e 35 20 61 6e 64 20 |ctions 1|3.5 and |
|000029a0| 31 33 2e 36 2e 20 7d 2b | 00 7b 5c 66 6f 6e 74 74 |13.6. }+|.{\fontt|
|000029b0| 62 6c 7b 5c 66 30 7d 7b | 5c 66 31 7d 7d 7b 5c 44 |bl{\f0}{|\f1}}{\D|
|000029c0| 46 20 59 6f 75 20 61 72 | 65 20 63 6f 72 72 65 63 |F You ar|e correc|
|000029d0| 74 21 20 7d 00 00 00 00 | 00 00 00 00 01 00 00 00 |t! }....|........|
|000029e0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000029f0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002a00| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002a10| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002a20| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002a30| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002a40| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002a50| 00 00 00 00 00 00 00 00 | 00 00 00 00 33 01 00 39 |........|....3..9|
|00002a60| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002a70| 00 00 00 00 00 02 00 02 | 00 14 00 7b 5c 66 6f 6e |........|...{\fon|
|00002a80| 74 74 62 6c 7b 5c 66 30 | 7d 7b 5c 66 31 7d 7d 00 |ttbl{\f0|}{\f1}}.|
|00002a90| 00 8b 00 7b 20 4e 6f 20 | 6d 61 74 74 65 72 20 68 |...{ No |matter h|
|00002aa0| 6f 77 20 6d 75 63 68 20 | 74 6f 74 61 6c 20 72 69 |ow much |total ri|
|00002ab0| 73 6b 20 61 6e 20 61 73 | 73 65 74 20 68 61 73 2c |sk an as|set has,|
|00002ac0| 20 6f 6e 6c 79 20 74 68 | 65 20 75 6e 73 79 73 74 | only th|e unsyst|
|00002ad0| 65 6d 61 74 69 63 20 70 | 6f 72 74 69 6f 6e 20 69 |ematic p|ortion i|
|00002ae0| 73 20 72 65 6c 65 76 61 | 6e 74 20 69 6e 20 64 65 |s releva|nt in de|
|00002af0| 74 65 72 6d 69 6e 69 6e | 67 20 74 68 65 20 65 78 |terminin|g the ex|
|00002b00| 70 65 63 74 65 64 20 72 | 65 74 75 72 6e 20 6f 6e |pected r|eturn on|
|00002b10| 20 74 68 61 74 20 61 73 | 73 65 74 2e 20 7d 08 00 | that as|set. }..|
|00002b20| 7b 20 54 72 75 65 20 7d | 09 00 7b 20 46 61 6c 73 |{ True }|..{ Fals|
|00002b30| 65 20 7d 00 00 00 00 00 | 00 5c 00 7b 5c 66 6f 6e |e }.....|.\.{\fon|
|00002b40| 74 74 62 6c 7b 5c 66 30 | 7d 7b 5c 66 31 7d 7d 7b |ttbl{\f0|}{\f1}}{|
|00002b50| 5c 44 46 20 49 74 20 69 | 73 20 6f 6e 6c 79 20 74 |\DF It i|s only t|
|00002b60| 68 65 20 73 79 73 74 65 | 6d 61 74 69 63 20 72 69 |he syste|matic ri|
|00002b70| 73 6b 20 74 68 61 74 20 | 6d 61 74 74 65 72 73 2e |sk that |matters.|
|00002b80| 20 52 65 76 69 65 77 20 | 73 65 63 74 69 6f 6e 20 | Review |section |
|00002b90| 31 33 2e 36 2e 20 7d 2b | 00 7b 5c 66 6f 6e 74 74 |13.6. }+|.{\fontt|
|00002ba0| 62 6c 7b 5c 66 30 7d 7b | 5c 66 31 7d 7d 7b 5c 44 |bl{\f0}{|\f1}}{\D|
|00002bb0| 46 20 59 6f 75 20 61 72 | 65 20 63 6f 72 72 65 63 |F You ar|e correc|
|00002bc0| 74 21 20 7d 00 00 00 00 | 00 00 00 00 01 00 00 00 |t! }....|........|
|00002bd0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002be0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002bf0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002c00| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002c10| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002c20| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002c30| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002c40| 00 00 00 00 00 00 00 00 | 00 00 00 00 33 01 00 39 |........|....3..9|
|00002c50| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002c60| 00 00 00 00 00 02 00 02 | 00 14 00 7b 5c 66 6f 6e |........|...{\fon|
|00002c70| 74 74 62 6c 7b 5c 66 30 | 7d 7b 5c 66 31 7d 7d 00 |ttbl{\f0|}{\f1}}.|
|00002c80| 00 19 01 7b 20 49 66 20 | 74 68 65 20 73 74 61 6e |...{ If |the stan|
|00002c90| 64 61 72 64 20 64 65 76 | 69 61 74 69 6f 6e 20 6f |dard dev|iation o|
|00002ca0| 66 20 72 65 74 75 72 6e | 20 6f 66 20 74 68 65 20 |f return| of the |
|00002cb0| 73 74 6f 63 6b 73 20 6f | 66 20 74 68 65 20 44 6f |stocks o|f the Do|
|00002cc0| 77 20 4a 6f 6e 65 73 20 | 49 6e 64 75 73 74 72 69 |w Jones |Industri|
|00002cd0| 61 6c 20 41 76 65 72 61 | 67 65 20 68 61 73 20 62 |al Avera|ge has b|
|00002ce0| 65 65 6e 20 61 70 70 72 | 6f 78 69 6d 61 74 65 6c |een appr|oximatel|
|00002cf0| 79 20 32 34 20 70 65 72 | 63 65 6e 74 20 70 65 72 |y 24 per|cent per|
|00002d00| 20 79 65 61 72 20 6f 76 | 65 72 20 74 68 65 20 6c | year ov|er the l|
|00002d10| 61 73 74 20 64 65 63 61 | 64 65 2c 20 69 74 20 6d |ast deca|de, it m|
|00002d20| 75 73 74 20 62 65 20 74 | 72 75 65 20 74 68 61 74 |ust be t|rue that|
|00002d30| 20 68 61 6c 66 20 6f 66 | 20 74 68 65 20 66 69 72 | half of| the fir|
|00002d40| 6d 27 73 20 69 6e 20 74 | 68 65 20 44 4a 49 41 20 |m's in t|he DJIA |
|00002d50| 68 61 76 65 20 61 20 73 | 74 61 6e 64 61 72 64 20 |have a s|tandard |
|00002d60| 64 65 76 69 61 74 69 6f | 6e 20 6f 66 20 72 65 74 |deviatio|n of ret|
|00002d70| 75 72 6e 20 62 65 6c 6f | 77 20 32 34 20 70 65 72 |urn belo|w 24 per|
|00002d80| 63 65 6e 74 20 6f 76 65 | 72 20 74 68 65 20 73 61 |cent ove|r the sa|
|00002d90| 6d 65 20 70 65 72 69 6f | 64 2e 20 7d 08 00 7b 20 |me perio|d. }..{ |
|00002da0| 54 72 75 65 20 7d 09 00 | 7b 20 46 61 6c 73 65 20 |True }..|{ False |
|00002db0| 7d 00 00 00 00 00 00 da | 00 7b 5c 66 6f 6e 74 74 |}.......|.{\fontt|
|00002dc0| 62 6c 7b 5c 66 30 7d 7b | 5c 66 31 7d 7d 7b 5c 44 |bl{\f0}{|\f1}}{\D|
|00002dd0| 46 20 52 65 63 61 6c 6c | 20 74 68 61 74 20 74 68 |F Recall| that th|
|00002de0| 65 20 61 76 65 72 61 67 | 65 20 72 65 74 75 72 6e |e averag|e return|
|00002df0| 20 6f 66 20 61 20 70 6f | 72 74 66 6f 6c 69 6f 20 | of a po|rtfolio |
|00002e00| 69 73 20 73 69 6d 70 6c | 79 20 61 20 77 65 69 67 |is simpl|y a weig|
|00002e10| 68 74 65 64 20 61 76 65 | 72 61 67 65 20 6f 66 20 |hted ave|rage of |
|00002e20| 74 68 65 20 72 65 74 75 | 72 6e 73 20 6f 66 20 74 |the retu|rns of t|
|00002e30| 68 65 20 73 74 6f 63 6b | 73 20 69 6e 20 74 68 65 |he stock|s in the|
|00002e40| 20 70 6f 72 74 66 6f 6c | 69 6f 20 62 75 74 20 74 | portfol|io but t|
|00002e50| 68 65 20 73 74 61 6e 64 | 61 72 64 20 64 65 76 69 |he stand|ard devi|
|00002e60| 61 74 69 6f 6e 20 6f 66 | 20 61 20 70 6f 72 74 66 |ation of| a portf|
|00002e70| 6f 6c 69 6f 20 69 73 20 | 6e 6f 74 2e 20 52 65 76 |olio is |not. Rev|
|00002e80| 69 65 77 20 73 65 63 74 | 69 6f 6e 20 31 33 2e 32 |iew sect|ion 13.2|
|00002e90| 2e 20 7d 2b 00 7b 5c 66 | 6f 6e 74 74 62 6c 7b 5c |. }+.{\f|onttbl{\|
|00002ea0| 66 30 7d 7b 5c 66 31 7d | 7d 7b 5c 44 46 20 59 6f |f0}{\f1}|}{\DF Yo|
|00002eb0| 75 20 61 72 65 20 63 6f | 72 72 65 63 74 21 20 7d |u are co|rrect! }|
|00002ec0| 00 00 00 00 00 00 00 00 | 01 00 00 00 00 00 00 00 |........|........|
|00002ed0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002ee0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002ef0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002f00| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002f10| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002f20| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002f30| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002f40| 00 00 00 00 00 00 00 00 | 33 01 00 39 00 00 00 00 |........|3..9....|
|00002f50| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00002f60| 00 01 00 02 00 14 00 7b | 5c 66 6f 6e 74 74 62 6c |.......{|\fonttbl|
|00002f70| 7b 5c 66 30 7d 7b 5c 66 | 31 7d 7d 00 00 a5 00 7b |{\f0}{\f|1}}....{|
|00002f80| 20 41 73 73 75 6d 65 20 | 61 6c 6c 20 6f 66 20 74 | Assume |all of t|
|00002f90| 68 65 20 73 74 6f 63 6b | 73 20 69 6e 20 61 20 67 |he stock|s in a g|
|00002fa0| 69 76 65 6e 20 69 6e 64 | 75 73 74 72 79 20 66 61 |iven ind|ustry fa|
|00002fb0| 6c 6c 20 61 73 20 61 20 | 72 65 73 75 6c 74 20 6f |ll as a |result o|
|00002fc0| 66 20 61 6e 20 61 6e 6e | 6f 75 6e 63 65 6d 65 6e |f an ann|ouncemen|
|00002fd0| 74 20 61 62 6f 75 74 20 | 74 68 65 20 67 65 6e 65 |t about |the gene|
|00002fe0| 72 61 6c 20 68 65 61 6c | 74 68 20 6f 66 20 74 68 |ral heal|th of th|
|00002ff0| 65 20 65 63 6f 6e 6f 6d | 79 2e 20 20 54 68 69 73 |e econom|y. This|
|00003000| 20 69 73 20 61 6e 20 65 | 78 61 6d 70 6c 65 20 6f | is an e|xample o|
|00003010| 66 20 73 79 73 74 65 6d | 61 74 69 63 20 72 69 73 |f system|atic ris|
|00003020| 6b 2e 20 7d 08 00 7b 20 | 54 72 75 65 20 7d 09 00 |k. }..{ |True }..|
|00003030| 7b 20 46 61 6c 73 65 20 | 7d 00 00 00 00 00 00 2b |{ False |}......+|
|00003040| 00 7b 5c 66 6f 6e 74 74 | 62 6c 7b 5c 66 30 7d 7b |.{\fontt|bl{\f0}{|
|00003050| 5c 66 31 7d 7d 7b 5c 44 | 46 20 59 6f 75 20 61 72 |\f1}}{\D|F You ar|
|00003060| 65 20 63 6f 72 72 65 63 | 74 21 20 7d 97 00 7b 5c |e correc|t! }..{\|
|00003070| 66 6f 6e 74 74 62 6c 7b | 5c 66 30 7d 7b 5c 66 31 |fonttbl{|\f0}{\f1|
|00003080| 7d 7d 7b 5c 44 46 20 42 | 79 20 64 65 66 69 6e 69 |}}{\DF B|y defini|
|00003090| 74 69 6f 6e 2c 20 73 79 | 73 74 65 6d 61 74 69 63 |tion, sy|stematic|
|000030a0| 20 72 69 73 6b 20 69 73 | 20 61 20 72 69 73 6b 20 | risk is| a risk |
|000030b0| 74 68 61 74 20 69 6e 66 | 6c 75 65 6e 63 65 73 20 |that inf|luences |
|000030c0| 61 20 6c 61 72 67 65 20 | 6e 75 6d 62 65 72 20 6f |a large |number o|
|000030d0| 66 20 61 73 73 65 74 73 | 2c 20 61 73 20 69 73 20 |f assets|, as is |
|000030e0| 74 68 65 20 63 61 73 65 | 20 68 65 72 65 2e 20 52 |the case| here. R|
|000030f0| 65 76 69 65 77 20 73 65 | 63 74 69 6f 6e 20 31 33 |eview se|ction 13|
|00003100| 2e 34 2e 20 7d 00 00 00 | 00 00 00 00 00 01 00 00 |.4. }...|........|
|00003110| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003120| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003130| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003140| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003150| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003160| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003170| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003180| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 33 01 00 |........|.....3..|
|00003190| 39 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |9.......|........|
|000031a0| 00 00 00 00 00 00 01 00 | 02 00 14 00 7b 5c 66 6f |........|....{\fo|
|000031b0| 6e 74 74 62 6c 7b 5c 66 | 30 7d 7b 5c 66 31 7d 7d |nttbl{\f|0}{\f1}}|
|000031c0| 00 00 5f 00 7b 20 53 79 | 73 74 65 6d 61 74 69 63 |.._.{ Sy|stematic|
|000031d0| 20 72 69 73 6b 20 69 73 | 20 61 20 74 79 70 65 20 | risk is| a type |
|000031e0| 6f 66 20 72 69 73 6b 20 | 74 68 61 74 20 69 6e 66 |of risk |that inf|
|000031f0| 6c 75 65 6e 63 65 73 20 | 61 6c 6c 20 61 73 73 65 |luences |all asse|
|00003200| 74 73 20 74 6f 20 61 20 | 67 72 65 61 74 65 72 20 |ts to a |greater |
|00003210| 6f 72 20 6c 65 73 73 65 | 72 20 64 65 67 72 65 65 |or lesse|r degree|
|00003220| 2e 20 7d 08 00 7b 20 54 | 72 75 65 20 7d 09 00 7b |. }..{ T|rue }..{|
|00003230| 20 46 61 6c 73 65 20 7d | 00 00 00 00 00 00 2b 00 | False }|......+.|
|00003240| 7b 5c 66 6f 6e 74 74 62 | 6c 7b 5c 66 30 7d 7b 5c |{\fonttb|l{\f0}{\|
|00003250| 66 31 7d 7d 7b 5c 44 46 | 20 59 6f 75 20 61 72 65 |f1}}{\DF| You are|
|00003260| 20 63 6f 72 72 65 63 74 | 21 20 7d 63 00 7b 5c 66 | correct|! }c.{\f|
|00003270| 6f 6e 74 74 62 6c 7b 5c | 66 30 7d 7b 5c 66 31 7d |onttbl{\|f0}{\f1}|
|00003280| 7d 7b 5c 44 46 20 54 68 | 69 73 20 69 73 20 74 68 |}{\DF Th|is is th|
|00003290| 65 20 74 65 78 74 62 6f | 6f 6b 20 64 65 66 69 6e |e textbo|ok defin|
|000032a0| 69 74 69 6f 6e 20 6f 66 | 20 73 79 73 74 65 6d 61 |ition of| systema|
|000032b0| 74 69 63 20 72 69 73 6b | 2e 20 52 65 76 69 65 77 |tic risk|. Review|
|000032c0| 20 73 65 63 74 69 6f 6e | 20 31 33 2e 34 2e 20 7d | section| 13.4. }|
|000032d0| 00 00 00 00 00 00 00 00 | 01 00 00 00 00 00 00 00 |........|........|
|000032e0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000032f0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003300| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003310| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003320| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003330| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003340| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003350| 00 00 00 00 00 00 00 00 | 33 01 00 39 00 00 00 00 |........|3..9....|
|00003360| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003370| 00 02 00 02 00 14 00 7b | 5c 66 6f 6e 74 74 62 6c |.......{|\fonttbl|
|00003380| 7b 5c 66 30 7d 7b 5c 66 | 31 7d 7d 00 00 5f 00 7b |{\f0}{\f|1}}.._.{|
|00003390| 20 41 20 75 6e 69 71 75 | 65 20 72 69 73 6b 20 69 | A uniqu|e risk i|
|000033a0| 73 20 61 20 72 69 73 6b | 20 74 68 61 74 20 61 66 |s a risk| that af|
|000033b0| 66 65 63 74 73 20 61 20 | 72 65 6c 61 74 69 76 65 |fects a |relative|
|000033c0| 6c 79 20 6c 61 72 67 65 | 20 6e 75 6d 62 65 72 20 |ly large| number |
|000033d0| 6f 66 20 74 68 65 20 61 | 73 73 65 74 73 20 69 6e |of the a|ssets in|
|000033e0| 20 74 68 65 20 6d 61 72 | 6b 65 74 2e 20 7d 08 00 | the mar|ket. }..|
|000033f0| 7b 20 54 72 75 65 20 7d | 09 00 7b 20 46 61 6c 73 |{ True }|..{ Fals|
|00003400| 65 20 7d 00 00 00 00 00 | 00 7d 00 7b 5c 66 6f 6e |e }.....|.}.{\fon|
|00003410| 74 74 62 6c 7b 5c 66 30 | 7d 7b 5c 66 31 7d 7d 7b |ttbl{\f0|}{\f1}}{|
|00003420| 5c 44 46 20 54 68 69 73 | 20 69 73 20 74 68 65 20 |\DF This| is the |
|00003430| 64 65 66 69 6e 69 74 69 | 6f 6e 20 6f 66 20 73 79 |definiti|on of sy|
|00003440| 73 74 65 6d 61 74 69 63 | 20 72 69 73 6b 2c 20 6e |stematic| risk, n|
|00003450| 6f 74 20 75 6e 69 71 75 | 65 20 6f 72 20 61 73 73 |ot uniqu|e or ass|
|00003460| 65 74 2d 73 70 65 63 69 | 66 69 63 20 72 69 73 6b |et-speci|fic risk|
|00003470| 2e 20 52 65 76 69 65 77 | 20 73 65 63 74 69 6f 6e |. Review| section|
|00003480| 20 31 33 2e 34 2e 20 7d | 2b 00 7b 5c 66 6f 6e 74 | 13.4. }|+.{\font|
|00003490| 74 62 6c 7b 5c 66 30 7d | 7b 5c 66 31 7d 7d 7b 5c |tbl{\f0}|{\f1}}{\|
|000034a0| 44 46 20 59 6f 75 20 61 | 72 65 20 63 6f 72 72 65 |DF You a|re corre|
|000034b0| 63 74 21 20 7d 00 00 00 | 00 00 00 00 00 01 00 00 |ct! }...|........|
|000034c0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000034d0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000034e0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000034f0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003500| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003510| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003520| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003530| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 33 01 00 |........|.....3..|
|00003540| 39 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |9.......|........|
|00003550| 00 00 00 00 00 00 02 00 | 02 00 14 00 7b 5c 66 6f |........|....{\fo|
|00003560| 6e 74 74 62 6c 7b 5c 66 | 30 7d 7b 5c 66 31 7d 7d |nttbl{\f|0}{\f1}}|
|00003570| 00 00 51 00 7b 20 41 20 | 6d 61 72 6b 65 74 20 72 |..Q.{ A |market r|
|00003580| 69 73 6b 20 66 61 63 74 | 6f 72 20 69 73 20 61 20 |isk fact|or is a |
|00003590| 72 69 73 6b 20 74 68 61 | 74 20 69 6e 66 6c 75 65 |risk tha|t influe|
|000035a0| 6e 63 65 73 20 6f 6e 6c | 79 20 61 20 73 6d 61 6c |nces onl|y a smal|
|000035b0| 6c 20 6e 75 6d 62 65 72 | 20 6f 66 20 61 73 73 65 |l number| of asse|
|000035c0| 74 73 2e 20 7d 08 00 7b | 20 54 72 75 65 20 7d 09 |ts. }..{| True }.|
|000035d0| 00 7b 20 46 61 6c 73 65 | 20 7d 00 00 00 00 00 00 |.{ False| }......|
|000035e0| 5d 00 7b 5c 66 6f 6e 74 | 74 62 6c 7b 5c 66 30 7d |].{\font|tbl{\f0}|
|000035f0| 7b 5c 66 31 7d 7d 7b 5c | 44 46 20 4d 61 72 6b 65 |{\f1}}{\|DF Marke|
|00003600| 74 20 72 69 73 6b 73 20 | 61 66 66 65 63 74 20 61 |t risks |affect a|
|00003610| 20 6c 61 72 67 65 20 6e | 75 6d 62 65 72 20 6f 66 | large n|umber of|
|00003620| 20 61 73 73 65 74 73 2e | 20 52 65 76 69 65 77 20 | assets.| Review |
|00003630| 73 65 63 74 69 6f 6e 20 | 31 33 2e 34 2e 20 7d 2b |section |13.4. }+|
|00003640| 00 7b 5c 66 6f 6e 74 74 | 62 6c 7b 5c 66 30 7d 7b |.{\fontt|bl{\f0}{|
|00003650| 5c 66 31 7d 7d 7b 5c 44 | 46 20 59 6f 75 20 61 72 |\f1}}{\D|F You ar|
|00003660| 65 20 63 6f 72 72 65 63 | 74 21 20 7d 00 00 00 00 |e correc|t! }....|
|00003670| 00 00 00 00 01 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003680| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003690| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000036a0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000036b0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000036c0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000036d0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000036e0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000036f0| 00 00 00 00 33 01 00 39 | 00 00 00 00 00 00 00 00 |....3..9|........|
|00003700| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 02 00 02 |........|........|
|00003710| 00 14 00 7b 5c 66 6f 6e | 74 74 62 6c 7b 5c 66 30 |...{\fon|ttbl{\f0|
|00003720| 7d 7b 5c 66 31 7d 7d 00 | 00 9e 00 7b 20 49 74 20 |}{\f1}}.|...{ It |
|00003730| 69 73 20 4e 4f 54 20 70 | 6f 73 73 69 62 6c 65 20 |is NOT p|ossible |
|00003740| 74 6f 20 63 6f 6e 73 74 | 72 75 63 74 20 61 20 70 |to const|ruct a p|
|00003750| 6f 72 74 66 6f 6c 69 6f | 20 77 69 74 68 20 7a 65 |ortfolio| with ze|
|00003760| 72 6f 20 76 61 72 69 61 | 6e 63 65 20 6f 66 20 65 |ro varia|nce of e|
|00003770| 78 70 65 63 74 65 64 20 | 72 65 74 75 72 6e 73 20 |xpected |returns |
|00003780| 66 72 6f 6d 20 61 73 73 | 65 74 73 20 77 68 6f 73 |from ass|ets whos|
|00003790| 65 20 65 78 70 65 63 74 | 65 64 20 72 65 74 75 72 |e expect|ed retur|
|000037a0| 6e 73 20 68 61 76 65 20 | 70 6f 73 69 74 69 76 65 |ns have |positive|
|000037b0| 20 76 61 72 69 61 6e 63 | 65 20 69 6e 64 69 76 69 | varianc|e indivi|
|000037c0| 64 75 61 6c 6c 79 2e 20 | 7d 08 00 7b 20 54 72 75 |dually. |}..{ Tru|
|000037d0| 65 20 7d 09 00 7b 20 46 | 61 6c 73 65 20 7d 00 00 |e }..{ F|alse }..|
|000037e0| 00 00 00 00 94 00 7b 5c | 66 6f 6e 74 74 62 6c 7b |......{\|fonttbl{|
|000037f0| 5c 66 30 7d 7b 5c 66 31 | 7d 7d 7b 5c 44 46 20 49 |\f0}{\f1|}}{\DF I|
|00003800| 74 20 69 73 20 70 6f 73 | 73 69 62 6c 65 2e 20 57 |t is pos|sible. W|
|00003810| 68 61 74 20 6d 61 74 74 | 65 72 73 20 69 73 20 68 |hat matt|ers is h|
|00003820| 6f 77 20 74 68 65 20 73 | 74 6f 63 6b 20 70 72 69 |ow the s|tock pri|
|00003830| 63 65 73 20 6d 6f 76 65 | 20 72 65 6c 61 74 69 76 |ces move| relativ|
|00003840| 65 20 74 6f 20 6f 6e 65 | 20 61 6e 6f 74 68 65 72 |e to one| another|
|00003850| 2c 20 6e 6f 74 20 69 6e | 64 69 76 69 64 75 61 6c |, not in|dividual|
|00003860| 6c 79 2e 20 52 65 76 69 | 65 77 20 73 65 63 74 69 |ly. Revi|ew secti|
|00003870| 6f 6e 20 31 33 2e 32 2e | 20 7d 2b 00 7b 5c 66 6f |on 13.2.| }+.{\fo|
|00003880| 6e 74 74 62 6c 7b 5c 66 | 30 7d 7b 5c 66 31 7d 7d |nttbl{\f|0}{\f1}}|
|00003890| 7b 5c 44 46 20 59 6f 75 | 20 61 72 65 20 63 6f 72 |{\DF You| are cor|
|000038a0| 72 65 63 74 21 20 7d 00 | 00 00 00 00 00 00 00 01 |rect! }.|........|
|000038b0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000038c0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000038d0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000038e0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000038f0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003900| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003910| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003920| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 33 |........|.......3|
|00003930| 01 00 39 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |..9.....|........|
|00003940| 00 00 00 00 00 00 00 00 | 02 00 02 00 14 00 7b 5c |........|......{\|
|00003950| 66 6f 6e 74 74 62 6c 7b | 5c 66 30 7d 7b 5c 66 31 |fonttbl{|\f0}{\f1|
|00003960| 7d 7d 00 00 bb 01 7b 20 | 59 6f 75 20 62 65 6c 69 |}}....{ |You beli|
|00003970| 65 76 65 20 74 68 61 74 | 20 74 68 65 20 70 6f 73 |eve that| the pos|
|00003980| 73 69 62 6c 65 20 72 65 | 74 75 72 6e 73 20 6f 6e |sible re|turns on|
|00003990| 20 73 74 6f 63 6b 20 41 | 20 77 69 6c 6c 20 62 65 | stock A| will be|
|000039a0| 20 65 69 74 68 65 72 20 | 32 35 20 70 65 72 63 65 | either |25 perce|
|000039b0| 6e 74 20 6f 72 20 2d 31 | 35 20 70 65 72 63 65 6e |nt or -1|5 percen|
|000039c0| 74 20 6f 76 65 72 20 74 | 68 65 20 63 6f 6d 69 6e |t over t|he comin|
|000039d0| 67 20 79 65 61 72 2c 20 | 64 65 70 65 6e 64 69 6e |g year, |dependin|
|000039e0| 67 20 6f 6e 20 77 68 65 | 74 68 65 72 20 74 68 65 |g on whe|ther the|
|000039f0| 20 65 63 6f 6e 6f 6d 79 | 20 64 6f 65 73 20 77 65 | economy| does we|
|00003a00| 6c 6c 20 6f 72 20 64 6f | 65 73 20 70 6f 6f 72 6c |ll or do|es poorl|
|00003a10| 79 2e 20 47 69 76 65 6e | 20 73 6f 6d 65 20 70 72 |y. Given| some pr|
|00003a20| 6f 62 61 62 69 6c 69 74 | 69 65 73 20 6f 66 20 74 |obabilit|ies of t|
|00003a30| 68 65 20 66 75 74 75 72 | 65 20 73 74 61 74 65 20 |he futur|e state |
|00003a40| 6f 66 20 74 68 65 20 65 | 63 6f 6e 6f 6d 79 2c 20 |of the e|conomy, |
|00003a50| 79 6f 75 20 63 6f 6d 70 | 75 74 65 20 74 68 65 20 |you comp|ute the |
|00003a60| 73 74 61 6e 64 61 72 64 | 20 64 65 76 69 61 74 69 |standard| deviati|
|00003a70| 6f 6e 20 6f 66 20 74 68 | 65 20 70 6f 73 73 69 62 |on of th|e possib|
|00003a80| 6c 65 20 72 65 74 75 72 | 6e 73 2e 20 54 6f 20 67 |le retur|ns. To g|
|00003a90| 65 74 20 74 68 65 20 64 | 69 73 70 65 72 73 69 6f |et the d|ispersio|
|00003aa0| 6e 20 6f 66 20 74 68 65 | 20 70 6f 73 73 69 62 6c |n of the| possibl|
|00003ab0| 65 20 6f 75 74 63 6f 6d | 65 73 20 69 6e 20 74 68 |e outcom|es in th|
|00003ac0| 65 20 73 61 6d 65 20 75 | 6e 69 74 73 20 61 73 20 |e same u|nits as |
|00003ad0| 74 68 65 20 6f 75 74 63 | 6f 6d 65 73 20 74 68 65 |the outc|omes the|
|00003ae0| 6d 73 65 6c 76 65 73 20 | 28 69 2e 65 2e 2c 20 69 |mselves |(i.e., i|
|00003af0| 6e 20 70 65 72 63 65 6e | 74 29 2c 20 79 6f 75 20 |n percen|t), you |
|00003b00| 6d 75 73 74 20 74 68 65 | 6e 20 63 6f 6d 70 75 74 |must the|n comput|
|00003b10| 65 20 74 68 65 20 76 61 | 72 69 61 6e 63 65 2e 20 |e the va|riance. |
|00003b20| 7d 08 00 7b 20 54 72 75 | 65 20 7d 09 00 7b 20 46 |}..{ Tru|e }..{ F|
|00003b30| 61 6c 73 65 20 7d 00 00 | 00 00 00 00 73 00 7b 5c |alse }..|....s.{\|
|00003b40| 66 6f 6e 74 74 62 6c 7b | 5c 66 30 7d 7b 5c 66 31 |fonttbl{|\f0}{\f1|
|00003b50| 7d 7d 7b 5c 44 46 20 54 | 68 65 20 73 74 61 6e 64 |}}{\DF T|he stand|
|00003b60| 61 72 64 20 64 65 76 69 | 61 74 69 6f 6e 20 69 73 |ard devi|ation is|
|00003b70| 20 73 74 61 74 65 64 20 | 61 73 20 61 20 70 65 72 | stated |as a per|
|00003b80| 63 65 6e 74 2c 20 74 68 | 65 20 76 61 72 69 61 6e |cent, th|e varian|
|00003b90| 63 65 20 69 73 20 6e 6f | 74 2e 20 52 65 76 69 65 |ce is no|t. Revie|
|00003ba0| 77 20 73 65 63 74 69 6f | 6e 20 31 33 2e 31 2e 20 |w sectio|n 13.1. |
|00003bb0| 7d 2b 00 7b 5c 66 6f 6e | 74 74 62 6c 7b 5c 66 30 |}+.{\fon|ttbl{\f0|
|00003bc0| 7d 7b 5c 66 31 7d 7d 7b | 5c 44 46 20 59 6f 75 20 |}{\f1}}{|\DF You |
|00003bd0| 61 72 65 20 63 6f 72 72 | 65 63 74 21 20 7d 00 00 |are corr|ect! }..|
|00003be0| 00 00 00 00 00 00 01 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003bf0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003c00| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003c10| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003c20| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003c30| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003c40| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003c50| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003c60| 00 00 00 00 00 00 33 01 | 00 39 00 00 00 00 00 00 |......3.|.9......|
|00003c70| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 02 |........|........|
|00003c80| 00 02 00 14 00 7b 5c 66 | 6f 6e 74 74 62 6c 7b 5c |.....{\f|onttbl{\|
|00003c90| 66 30 7d 7b 5c 66 31 7d | 7d 00 00 83 00 7b 20 49 |f0}{\f1}|}....{ I|
|00003ca0| 66 20 79 6f 75 20 69 6e | 76 65 73 74 20 69 6e 20 |f you in|vest in |
|00003cb0| 73 74 6f 63 6b 73 20 77 | 69 74 68 20 68 69 67 68 |stocks w|ith high|
|00003cc0| 65 72 2d 74 68 61 6e 2d | 61 76 65 72 61 67 65 20 |er-than-|average |
|00003cd0| 62 65 74 61 73 2c 20 79 | 6f 75 20 61 72 65 20 63 |betas, y|ou are c|
|00003ce0| 65 72 74 61 69 6e 20 74 | 6f 20 65 61 72 6e 20 68 |ertain t|o earn h|
|00003cf0| 69 67 68 65 72 2d 74 68 | 61 6e 2d 61 76 65 72 61 |igher-th|an-avera|
|00003d00| 67 65 20 72 65 74 75 72 | 6e 73 20 6f 76 65 72 20 |ge retur|ns over |
|00003d10| 74 68 65 20 6e 65 78 74 | 20 79 65 61 72 2e 20 7d |the next| year. }|
|00003d20| 08 00 7b 20 54 72 75 65 | 20 7d 09 00 7b 20 46 61 |..{ True| }..{ Fa|
|00003d30| 6c 73 65 20 7d 00 00 00 | 00 00 00 a9 00 7b 5c 66 |lse }...|.....{\f|
|00003d40| 6f 6e 74 74 62 6c 7b 5c | 66 30 7d 7b 5c 66 31 7d |onttbl{\|f0}{\f1}|
|00003d50| 7d 7b 5c 44 46 20 57 68 | 69 6c 65 20 79 6f 75 20 |}{\DF Wh|ile you |
|00003d60| 61 72 65 20 74 61 6b 69 | 6e 67 20 6d 6f 72 65 20 |are taki|ng more |
|00003d70| 72 69 73 6b 20 61 6e 64 | 20 65 78 70 65 63 74 20 |risk and| expect |
|00003d80| 74 6f 20 65 61 72 6e 20 | 68 69 67 68 65 72 20 74 |to earn |higher t|
|00003d90| 68 61 6e 20 61 76 65 72 | 61 67 65 20 72 65 74 75 |han aver|age retu|
|00003da0| 72 6e 73 2c 20 74 68 65 | 72 65 20 61 72 65 20 6e |rns, the|re are n|
|00003db0| 6f 20 67 75 61 72 61 6e | 74 65 65 73 20 79 6f 75 |o guaran|tees you|
|00003dc0| 20 61 63 74 75 61 6c 6c | 79 20 77 69 6c 6c 2e 20 | actuall|y will. |
|00003dd0| 52 65 76 69 65 77 20 73 | 65 63 74 69 6f 6e 20 31 |Review s|ection 1|
|00003de0| 33 2e 37 2e 20 7d 2b 00 | 7b 5c 66 6f 6e 74 74 62 |3.7. }+.|{\fonttb|
|00003df0| 6c 7b 5c 66 30 7d 7b 5c | 66 31 7d 7d 7b 5c 44 46 |l{\f0}{\|f1}}{\DF|
|00003e00| 20 59 6f 75 20 61 72 65 | 20 63 6f 72 72 65 63 74 | You are| correct|
|00003e10| 21 20 7d 00 00 00 00 00 | 00 00 00 01 00 00 00 00 |! }.....|........|
|00003e20| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003e30| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003e40| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003e50| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003e60| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003e70| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003e80| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003e90| 00 00 00 00 00 00 00 00 | 00 00 00 33 01 00 39 00 |........|...3..9.|
|00003ea0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00003eb0| 00 00 00 00 01 00 02 00 | 14 00 7b 5c 66 6f 6e 74 |........|..{\font|
|00003ec0| 74 62 6c 7b 5c 66 30 7d | 7b 5c 66 31 7d 7d 00 00 |tbl{\f0}|{\f1}}..|
|00003ed0| 74 00 7b 20 49 66 20 77 | 6f 72 6c 64 20 65 76 65 |t.{ If w|orld eve|
|00003ee0| 6e 74 73 20 63 61 75 73 | 65 20 69 6e 76 65 73 74 |nts caus|e invest|
|00003ef0| 6f 72 73 20 74 6f 20 62 | 65 63 6f 6d 65 20 6d 6f |ors to b|ecome mo|
|00003f00| 72 65 20 72 69 73 6b 2d | 61 76 65 72 73 65 2c 20 |re risk-|averse, |
|00003f10| 77 65 20 77 6f 75 6c 64 | 20 65 78 70 65 63 74 20 |we would| expect |
|00003f20| 74 68 65 20 6d 61 72 6b | 65 74 20 72 69 73 6b 20 |the mark|et risk |
|00003f30| 70 72 65 6d 69 75 6d 20 | 74 6f 20 69 6e 63 72 65 |premium |to incre|
|00003f40| 61 73 65 2e 20 7d 08 00 | 7b 20 54 72 75 65 20 7d |ase. }..|{ True }|
|00003f50| 09 00 7b 20 46 61 6c 73 | 65 20 7d 00 00 00 00 00 |..{ Fals|e }.....|
|00003f60| 00 2b 00 7b 5c 66 6f 6e | 74 74 62 6c 7b 5c 66 30 |.+.{\fon|ttbl{\f0|
|00003f70| 7d 7b 5c 66 31 7d 7d 7b | 5c 44 46 20 59 6f 75 20 |}{\f1}}{|\DF You |
|00003f80| 61 72 65 20 63 6f 72 72 | 65 63 74 21 20 7d 7a 00 |are corr|ect! }z.|
|00003f90| 7b 5c 66 6f 6e 74 74 62 | 6c 7b 5c 66 30 7d 7b 5c |{\fonttb|l{\f0}{\|
|00003fa0| 66 31 7d 7d 7b 5c 44 46 | 20 52 69 73 6b 20 70 72 |f1}}{\DF| Risk pr|
|00003fb0| 65 6d 69 75 6d 73 20 73 | 68 6f 75 6c 64 20 67 72 |emiums s|hould gr|
|00003fc0| 6f 77 20 61 73 20 69 6e | 76 65 73 74 6f 72 73 20 |ow as in|vestors |
|00003fd0| 62 65 63 6f 6d 65 20 6d | 6f 72 65 20 61 76 65 72 |become m|ore aver|
|00003fe0| 73 65 20 74 6f 20 74 61 | 6b 69 6e 67 20 72 69 73 |se to ta|king ris|
|00003ff0| 6b 73 2e 20 52 65 76 69 | 65 77 20 73 65 63 74 69 |ks. Revi|ew secti|
|00004000| 6f 6e 20 31 33 2e 37 2e | 20 7d 00 00 00 00 00 00 |on 13.7.| }......|
|00004010| 00 00 01 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004020| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004030| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004040| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004050| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004060| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004070| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004080| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004090| 00 00 33 01 00 39 00 00 | 00 00 00 00 00 00 00 00 |..3..9..|........|
|000040a0| 00 00 00 00 00 00 00 00 | 00 00 00 02 00 02 00 14 |........|........|
|000040b0| 00 7b 5c 66 6f 6e 74 74 | 62 6c 7b 5c 66 30 7d 7b |.{\fontt|bl{\f0}{|
|000040c0| 5c 66 31 7d 7d 00 00 8b | 00 7b 20 54 68 65 20 70 |\f1}}...|.{ The p|
|000040d0| 72 6f 6a 65 63 74 65 64 | 20 72 69 73 6b 20 70 72 |rojected| risk pr|
|000040e0| 65 6d 69 75 6d 20 69 73 | 20 64 65 66 69 6e 65 64 |emium is| defined|
|000040f0| 20 61 73 20 74 68 65 20 | 73 75 6d 20 6f 66 20 74 | as the |sum of t|
|00004100| 68 65 20 65 78 70 65 63 | 74 65 64 20 72 65 74 75 |he expec|ted retu|
|00004110| 72 6e 20 6f 6e 20 61 20 | 72 69 73 6b 79 20 69 6e |rn on a |risky in|
|00004120| 76 65 73 74 6d 65 6e 74 | 20 61 6e 64 20 74 68 65 |vestment| and the|
|00004130| 20 72 65 74 75 72 6e 20 | 6f 6e 20 61 20 72 69 73 | return |on a ris|
|00004140| 6b 2d 66 72 65 65 20 69 | 6e 76 65 73 74 6d 65 6e |k-free i|nvestmen|
|00004150| 74 2e 20 7d 08 00 7b 20 | 54 72 75 65 20 7d 09 00 |t. }..{ |True }..|
|00004160| 7b 20 46 61 6c 73 65 20 | 7d 00 00 00 00 00 00 72 |{ False |}......r|
|00004170| 00 7b 5c 66 6f 6e 74 74 | 62 6c 7b 5c 66 30 7d 7b |.{\fontt|bl{\f0}{|
|00004180| 5c 66 31 7d 7d 7b 5c 44 | 46 20 54 68 65 20 72 69 |\f1}}{\D|F The ri|
|00004190| 73 6b 20 70 72 65 6d 69 | 75 6d 20 69 73 20 74 68 |sk premi|um is th|
|000041a0| 65 20 64 69 66 66 65 72 | 65 6e 63 65 20 62 65 74 |e differ|ence bet|
|000041b0| 77 65 65 6e 20 74 68 65 | 73 65 20 74 77 6f 2c 20 |ween the|se two, |
|000041c0| 6e 6f 74 20 74 68 65 20 | 73 75 6d 2e 20 52 65 76 |not the |sum. Rev|
|000041d0| 69 65 77 20 73 65 63 74 | 69 6f 6e 20 31 33 2e 37 |iew sect|ion 13.7|
|000041e0| 2e 20 7d 2b 00 7b 5c 66 | 6f 6e 74 74 62 6c 7b 5c |. }+.{\f|onttbl{\|
|000041f0| 66 30 7d 7b 5c 66 31 7d | 7d 7b 5c 44 46 20 59 6f |f0}{\f1}|}{\DF Yo|
|00004200| 75 20 61 72 65 20 63 6f | 72 72 65 63 74 21 20 7d |u are co|rrect! }|
|00004210| 00 00 00 00 00 00 00 00 | 01 00 00 00 00 00 00 00 |........|........|
|00004220| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004230| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004240| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004250| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004260| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004270| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004280| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004290| 00 00 00 00 00 00 00 00 | 33 01 00 39 00 00 00 00 |........|3..9....|
|000042a0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000042b0| 00 02 00 02 00 14 00 7b | 5c 66 6f 6e 74 74 62 6c |.......{|\fonttbl|
|000042c0| 7b 5c 66 30 7d 7b 5c 66 | 31 7d 7d 00 00 6d 00 7b |{\f0}{\f|1}}..m.{|
|000042d0| 20 54 68 65 20 72 65 61 | 6c 69 7a 65 64 20 72 65 | The rea|lized re|
|000042e0| 74 75 72 6e 20 6f 6e 20 | 61 6e 20 61 73 73 65 74 |turn on |an asset|
|000042f0| 20 63 61 6e 20 62 65 20 | 62 72 6f 6b 65 6e 20 64 | can be |broken d|
|00004300| 6f 77 6e 20 69 6e 74 6f | 20 61 6e 20 65 78 70 65 |own into| an expe|
|00004310| 63 74 65 64 20 63 6f 6d | 70 6f 6e 65 6e 74 20 61 |cted com|ponent a|
|00004320| 6e 64 20 61 20 64 69 73 | 63 6f 75 6e 74 65 64 20 |nd a dis|counted |
|00004330| 63 6f 6d 70 6f 6e 65 6e | 74 2e 20 7d 08 00 7b 20 |componen|t. }..{ |
|00004340| 54 72 75 65 20 7d 09 00 | 7b 20 46 61 6c 73 65 20 |True }..|{ False |
|00004350| 7d 00 00 00 00 00 00 b4 | 00 7b 5c 66 6f 6e 74 74 |}.......|.{\fontt|
|00004360| 62 6c 7b 5c 66 30 7d 7b | 5c 66 31 7d 7d 7b 5c 44 |bl{\f0}{|\f1}}{\D|
|00004370| 46 20 54 68 65 20 65 78 | 70 65 63 74 65 64 20 63 |F The ex|pected c|
|00004380| 6f 6d 70 6f 6e 65 6e 74 | 20 69 73 20 61 6c 73 6f |omponent| is also|
|00004390| 20 73 6f 6d 65 74 69 6d | 65 73 20 72 65 66 65 72 | sometim|es refer|
|000043a0| 72 65 64 20 74 6f 20 61 | 73 20 61 20 64 69 73 63 |red to a|s a disc|
|000043b0| 6f 75 6e 74 65 64 20 63 | 6f 6d 70 6f 6e 65 6e 74 |ounted c|omponent|
|000043c0| 2e 20 57 68 61 74 20 69 | 73 20 74 68 65 20 73 65 |. What i|s the se|
|000043d0| 63 6f 6e 64 20 63 6f 6d | 70 6f 6e 65 6e 74 20 6f |cond com|ponent o|
|000043e0| 66 20 74 68 65 20 72 65 | 61 6c 69 7a 65 64 20 72 |f the re|alized r|
|000043f0| 65 74 75 72 6e 3f 20 52 | 65 76 69 65 77 20 73 65 |eturn? R|eview se|
|00004400| 63 74 69 6f 6e 20 31 33 | 2e 33 2e 20 7d 2b 00 7b |ction 13|.3. }+.{|
|00004410| 5c 66 6f 6e 74 74 62 6c | 7b 5c 66 30 7d 7b 5c 66 |\fonttbl|{\f0}{\f|
|00004420| 31 7d 7d 7b 5c 44 46 20 | 59 6f 75 20 61 72 65 20 |1}}{\DF |You are |
|00004430| 63 6f 72 72 65 63 74 21 | 20 7d 00 00 00 00 00 00 |correct!| }......|
|00004440| 00 00 01 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004450| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004460| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004470| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004480| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004490| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000044a0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000044b0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000044c0| 00 00 33 01 00 39 00 00 | 00 00 00 00 00 00 00 00 |..3..9..|........|
|000044d0| 00 00 00 00 00 00 00 00 | 00 00 00 01 00 02 00 14 |........|........|
|000044e0| 00 7b 5c 66 6f 6e 74 74 | 62 6c 7b 5c 66 30 7d 7b |.{\fontt|bl{\f0}{|
|000044f0| 5c 66 31 7d 7d 00 00 d7 | 00 7b 20 41 20 66 69 72 |\f1}}...|.{ A fir|
|00004500| 6d 20 69 6e 20 53 6f 75 | 74 68 20 44 61 6b 6f 74 |m in Sou|th Dakot|
|00004510| 61 20 61 6e 6e 6f 75 6e | 63 65 73 20 61 20 72 65 |a announ|ces a re|
|00004520| 76 6f 6c 75 74 69 6f 6e | 61 72 79 20 77 61 79 20 |volution|ary way |
|00004530| 74 6f 20 6d 61 6b 65 20 | 61 75 74 6f 20 61 69 72 |to make |auto air|
|00004540| 62 61 67 73 20 69 6e 20 | 61 20 77 61 79 20 74 68 |bags in |a way th|
|00004550| 61 74 20 64 65 63 72 65 | 61 73 65 73 20 74 68 65 |at decre|ases the|
|00004560| 69 72 20 72 69 73 6b 20 | 74 6f 20 61 75 74 6f 6d |ir risk |to autom|
|00004570| 6f 62 69 6c 65 20 6f 63 | 63 75 70 61 6e 74 73 2e |obile oc|cupants.|
|00004580| 20 20 54 68 69 73 20 69 | 73 20 61 20 74 79 70 65 | This i|s a type|
|00004590| 20 6f 66 20 73 75 72 70 | 72 69 73 65 20 74 68 61 | of surp|rise tha|
|000045a0| 74 20 77 6f 75 6c 64 20 | 62 65 20 63 68 61 72 61 |t would |be chara|
|000045b0| 63 74 65 72 69 7a 65 64 | 20 61 73 20 75 6e 73 79 |cterized| as unsy|
|000045c0| 73 74 65 6d 61 74 69 63 | 20 72 69 73 6b 2e 20 7d |stematic| risk. }|
|000045d0| 08 00 7b 20 54 72 75 65 | 20 7d 09 00 7b 20 46 61 |..{ True| }..{ Fa|
|000045e0| 6c 73 65 20 7d 00 00 00 | 00 00 00 2b 00 7b 5c 66 |lse }...|...+.{\f|
|000045f0| 6f 6e 74 74 62 6c 7b 5c | 66 30 7d 7b 5c 66 31 7d |onttbl{\|f0}{\f1}|
|00004600| 7d 7b 5c 44 46 20 59 6f | 75 20 61 72 65 20 63 6f |}{\DF Yo|u are co|
|00004610| 72 72 65 63 74 21 20 7d | a5 00 7b 5c 66 6f 6e 74 |rrect! }|..{\font|
|00004620| 74 62 6c 7b 5c 66 30 7d | 7b 5c 66 31 7d 7d 7b 5c |tbl{\f0}|{\f1}}{\|
|00004630| 44 46 20 54 6f 20 71 75 | 61 6c 69 66 79 20 61 73 |DF To qu|alify as|
|00004640| 20 61 20 73 79 73 74 65 | 6d 61 74 69 63 20 72 69 | a syste|matic ri|
|00004650| 73 6b 2c 20 74 68 69 73 | 20 61 6e 6e 6f 75 6e 63 |sk, this| announc|
|00004660| 65 6d 65 6e 74 20 77 6f | 75 6c 64 20 68 61 76 65 |ement wo|uld have|
|00004670| 20 74 6f 20 61 66 66 65 | 63 74 20 61 20 6c 61 72 | to affe|ct a lar|
|00004680| 67 65 20 6e 75 6d 62 65 | 72 20 6f 66 20 61 73 73 |ge numbe|r of ass|
|00004690| 65 74 73 2e 20 48 6f 77 | 20 77 6f 75 6c 64 20 69 |ets. How| would i|
|000046a0| 74 20 64 6f 20 73 6f 3f | 20 52 65 76 69 65 77 20 |t do so?| Review |
|000046b0| 73 65 63 74 69 6f 6e 20 | 31 33 2e 34 2e 20 7d 00 |section |13.4. }.|
|000046c0| 00 00 00 00 00 00 00 01 | 00 00 00 00 00 00 00 00 |........|........|
|000046d0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000046e0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000046f0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004700| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004710| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004720| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004730| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004740| 00 00 00 00 00 00 00 33 | 01 00 39 00 00 00 00 00 |.......3|..9.....|
|00004750| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004760| 01 00 02 00 14 00 7b 5c | 66 6f 6e 74 74 62 6c 7b |......{\|fonttbl{|
|00004770| 5c 66 30 7d 7b 5c 66 31 | 7d 7d 00 00 a2 00 7b 20 |\f0}{\f1|}}....{ |
|00004780| 41 6e 20 65 78 61 6d 70 | 6c 65 20 6f 66 20 73 79 |An examp|le of sy|
|00004790| 73 74 65 6d 61 74 69 63 | 20 72 69 73 6b 20 77 6f |stematic| risk wo|
|000047a0| 75 6c 64 20 62 65 20 69 | 66 20 74 68 65 20 73 74 |uld be i|f the st|
|000047b0| 6f 63 6b 20 6f 66 20 61 | 69 72 6c 69 6e 65 73 20 |ock of a|irlines |
|000047c0| 64 72 6f 70 70 65 64 20 | 61 66 74 65 72 20 74 77 |dropped |after tw|
|000047d0| 6f 20 61 69 72 70 6c 61 | 6e 65 73 20 63 72 61 73 |o airpla|nes cras|
|000047e0| 68 65 64 20 6f 6e 20 74 | 68 65 20 73 61 6d 65 20 |hed on t|he same |
|000047f0| 64 61 79 20 6d 61 6b 69 | 6e 67 20 6d 61 6e 79 20 |day maki|ng many |
|00004800| 70 61 73 73 65 6e 67 65 | 72 73 20 74 6f 6f 20 6e |passenge|rs too n|
|00004810| 65 72 76 6f 75 73 20 74 | 6f 20 66 6c 79 2e 20 7d |ervous t|o fly. }|
|00004820| 08 00 7b 20 54 72 75 65 | 20 7d 09 00 7b 20 46 61 |..{ True| }..{ Fa|
|00004830| 6c 73 65 20 7d 00 00 00 | 00 00 00 2b 00 7b 5c 66 |lse }...|...+.{\f|
|00004840| 6f 6e 74 74 62 6c 7b 5c | 66 30 7d 7b 5c 66 31 7d |onttbl{\|f0}{\f1}|
|00004850| 7d 7b 5c 44 46 20 59 6f | 75 20 61 72 65 20 63 6f |}{\DF Yo|u are co|
|00004860| 72 72 65 63 74 21 20 7d | 9b 00 7b 5c 66 6f 6e 74 |rrect! }|..{\font|
|00004870| 74 62 6c 7b 5c 66 30 7d | 7b 5c 66 31 7d 7d 7b 5c |tbl{\f0}|{\f1}}{\|
|00004880| 44 46 20 53 69 6e 63 65 | 20 74 68 69 73 20 6e 65 |DF Since| this ne|
|00004890| 77 73 20 69 6d 70 61 63 | 74 73 20 61 20 6c 61 72 |ws impac|ts a lar|
|000048a0| 67 65 20 6e 75 6d 62 65 | 72 20 6f 66 20 61 73 73 |ge numbe|r of ass|
|000048b0| 65 74 73 2c 20 69 2e 65 | 2e 2c 20 74 68 65 20 61 |ets, i.e|., the a|
|000048c0| 69 72 6c 69 6e 65 20 73 | 74 6f 63 6b 73 2c 20 77 |irline s|tocks, w|
|000048d0| 68 79 20 69 73 6e 27 74 | 20 69 74 20 61 20 73 79 |hy isn't| it a sy|
|000048e0| 73 74 65 6d 61 74 69 63 | 20 72 69 73 6b 3f 20 52 |stematic| risk? R|
|000048f0| 65 76 69 65 77 20 73 65 | 63 74 69 6f 6e 20 31 33 |eview se|ction 13|
|00004900| 2e 34 2e 20 7d 00 00 00 | 00 00 00 00 00 01 00 00 |.4. }...|........|
|00004910| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004920| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004930| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004940| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004950| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004960| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004970| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004980| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 33 01 00 |........|.....3..|
|00004990| 39 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |9.......|........|
|000049a0| 00 00 00 00 00 00 01 00 | 02 00 14 00 7b 5c 66 6f |........|....{\fo|
|000049b0| 6e 74 74 62 6c 7b 5c 66 | 30 7d 7b 5c 66 31 7d 7d |nttbl{\f|0}{\f1}}|
|000049c0| 00 00 64 00 7b 20 53 6f | 6d 65 20 6f 66 20 74 68 |..d.{ So|me of th|
|000049d0| 65 20 72 69 73 6b 69 6e | 65 73 73 20 61 73 73 6f |e riskin|ess asso|
|000049e0| 63 69 61 74 65 64 20 77 | 69 74 68 20 69 6e 64 69 |ciated w|ith indi|
|000049f0| 76 69 64 75 61 6c 20 61 | 73 73 65 74 73 20 63 61 |vidual a|ssets ca|
|00004a00| 6e 20 62 65 20 65 6c 69 | 6d 69 6e 61 74 65 64 20 |n be eli|minated |
|00004a10| 62 79 20 66 6f 72 6d 69 | 6e 67 20 70 6f 72 74 66 |by formi|ng portf|
|00004a20| 6f 6c 69 6f 73 2e 20 7d | 08 00 7b 20 54 72 75 65 |olios. }|..{ True|
|00004a30| 20 7d 09 00 7b 20 46 61 | 6c 73 65 20 7d 00 00 00 | }..{ Fa|lse }...|
|00004a40| 00 00 00 2b 00 7b 5c 66 | 6f 6e 74 74 62 6c 7b 5c |...+.{\f|onttbl{\|
|00004a50| 66 30 7d 7b 5c 66 31 7d | 7d 7b 5c 44 46 20 59 6f |f0}{\f1}|}{\DF Yo|
|00004a60| 75 20 61 72 65 20 63 6f | 72 72 65 63 74 21 20 7d |u are co|rrect! }|
|00004a70| 96 00 7b 5c 66 6f 6e 74 | 74 62 6c 7b 5c 66 30 7d |..{\font|tbl{\f0}|
|00004a80| 7b 5c 66 31 7d 7d 7b 5c | 44 46 20 54 68 69 73 20 |{\f1}}{\|DF This |
|00004a90| 69 73 20 6f 6e 65 20 6f | 66 20 74 68 65 20 70 72 |is one o|f the pr|
|00004aa0| 69 6d 61 72 79 20 6c 65 | 73 73 6f 6e 73 20 74 68 |imary le|ssons th|
|00004ab0| 61 74 20 63 61 6e 20 62 | 65 20 6c 65 61 72 6e 65 |at can b|e learne|
|00004ac0| 64 20 66 72 6f 6d 20 73 | 74 75 64 79 69 6e 67 20 |d from s|tudying |
|00004ad0| 74 68 65 20 70 72 69 6e | 63 69 70 6c 65 20 6f 66 |the prin|ciple of|
|00004ae0| 20 64 69 76 65 72 73 69 | 66 69 63 61 74 69 6f 6e | diversi|fication|
|00004af0| 2e 20 52 65 76 69 65 77 | 20 73 65 63 74 69 6f 6e |. Review| section|
|00004b00| 20 31 33 2e 35 2e 20 7d | 00 00 00 00 00 00 00 00 | 13.5. }|........|
|00004b10| 01 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004b20| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004b30| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004b40| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004b50| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004b60| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004b70| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004b80| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004b90| 33 01 00 39 00 00 00 00 | 00 00 00 00 00 00 00 00 |3..9....|........|
|00004ba0| 00 00 00 00 00 00 00 00 | 00 01 00 02 00 14 00 7b |........|.......{|
|00004bb0| 5c 66 6f 6e 74 74 62 6c | 7b 5c 66 30 7d 7b 5c 66 |\fonttbl|{\f0}{\f|
|00004bc0| 31 7d 7d 00 00 56 00 7b | 20 54 68 65 72 65 20 69 |1}}..V.{| There i|
|00004bd0| 73 20 61 20 6d 69 6e 69 | 6d 75 6d 20 6c 65 76 65 |s a mini|mum leve|
|00004be0| 6c 20 6f 66 20 72 69 73 | 6b 20 74 68 61 74 20 63 |l of ris|k that c|
|00004bf0| 61 6e 6e 6f 74 20 62 65 | 20 65 6c 69 6d 69 6e 61 |annot be| elimina|
|00004c00| 74 65 64 20 73 69 6d 70 | 6c 79 20 62 79 20 64 69 |ted simp|ly by di|
|00004c10| 76 65 72 73 69 66 79 69 | 6e 67 2e 20 7d 08 00 7b |versifyi|ng. }..{|
|00004c20| 20 54 72 75 65 20 7d 09 | 00 7b 20 46 61 6c 73 65 | True }.|.{ False|
|00004c30| 20 7d 00 00 00 00 00 00 | 2b 00 7b 5c 66 6f 6e 74 | }......|+.{\font|
|00004c40| 74 62 6c 7b 5c 66 30 7d | 7b 5c 66 31 7d 7d 7b 5c |tbl{\f0}|{\f1}}{\|
|00004c50| 44 46 20 59 6f 75 20 61 | 72 65 20 63 6f 72 72 65 |DF You a|re corre|
|00004c60| 63 74 21 20 7d 96 00 7b | 5c 66 6f 6e 74 74 62 6c |ct! }..{|\fonttbl|
|00004c70| 7b 5c 66 30 7d 7b 5c 66 | 31 7d 7d 7b 5c 44 46 20 |{\f0}{\f|1}}{\DF |
|00004c80| 54 68 69 73 20 69 73 20 | 6f 6e 65 20 6f 66 20 74 |This is |one of t|
|00004c90| 68 65 20 70 72 69 6d 61 | 72 79 20 6c 65 73 73 6f |he prima|ry lesso|
|00004ca0| 6e 73 20 74 68 61 74 20 | 63 61 6e 20 62 65 20 6c |ns that |can be l|
|00004cb0| 65 61 72 6e 65 64 20 66 | 72 6f 6d 20 73 74 75 64 |earned f|rom stud|
|00004cc0| 79 69 6e 67 20 74 68 65 | 20 70 72 69 6e 63 69 70 |ying the| princip|
|00004cd0| 6c 65 20 6f 66 20 64 69 | 76 65 72 73 69 66 69 63 |le of di|versific|
|00004ce0| 61 74 69 6f 6e 2e 20 52 | 65 76 69 65 77 20 73 65 |ation. R|eview se|
|00004cf0| 63 74 69 6f 6e 20 31 33 | 2e 35 2e 20 7d 00 00 00 |ction 13|.5. }...|
|00004d00| 00 00 00 00 00 01 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004d10| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004d20| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004d30| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004d40| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004d50| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004d60| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004d70| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004d80| 00 00 00 00 00 33 01 00 | 39 00 00 00 00 00 00 00 |.....3..|9.......|
|00004d90| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 01 00 |........|........|
|00004da0| 02 00 14 00 7b 5c 66 6f | 6e 74 74 62 6c 7b 5c 66 |....{\fo|nttbl{\f|
|00004db0| 30 7d 7b 5c 66 31 7d 7d | 00 00 7e 00 7b 20 54 68 |0}{\f1}}|..~.{ Th|
|00004dc0| 65 20 73 65 63 75 72 69 | 74 79 20 6d 61 72 6b 65 |e securi|ty marke|
|00004dd0| 74 20 6c 69 6e 65 20 69 | 73 20 62 61 73 65 64 20 |t line i|s based |
|00004de0| 6f 6e 20 74 68 65 20 69 | 64 65 61 20 74 68 61 74 |on the i|dea that|
|00004df0| 20 74 68 65 20 72 65 77 | 61 72 64 2d 74 6f 2d 72 | the rew|ard-to-r|
|00004e00| 69 73 6b 20 72 61 74 69 | 6f 20 6d 75 73 74 20 62 |isk rati|o must b|
|00004e10| 65 20 74 68 65 20 73 61 | 6d 65 20 66 6f 72 20 61 |e the sa|me for a|
|00004e20| 6c 6c 20 61 73 73 65 74 | 73 20 69 6e 20 74 68 65 |ll asset|s in the|
|00004e30| 20 6d 61 72 6b 65 74 2e | 20 7d 08 00 7b 20 54 72 | market.| }..{ Tr|
|00004e40| 75 65 20 7d 09 00 7b 20 | 46 61 6c 73 65 20 7d 00 |ue }..{ |False }.|
|00004e50| 00 00 00 00 00 2b 00 7b | 5c 66 6f 6e 74 74 62 6c |.....+.{|\fonttbl|
|00004e60| 7b 5c 66 30 7d 7b 5c 66 | 31 7d 7d 7b 5c 44 46 20 |{\f0}{\f|1}}{\DF |
|00004e70| 59 6f 75 20 61 72 65 20 | 63 6f 72 72 65 63 74 21 |You are |correct!|
|00004e80| 20 7d 68 00 7b 5c 66 6f | 6e 74 74 62 6c 7b 5c 66 | }h.{\fo|nttbl{\f|
|00004e90| 30 7d 7b 5c 66 31 7d 7d | 7b 5c 44 46 20 54 68 65 |0}{\f1}}|{\DF The|
|00004ea0| 20 53 4d 4c 20 67 72 61 | 70 68 69 63 61 6c 6c 79 | SML gra|phically|
|00004eb0| 20 69 6c 6c 75 73 74 72 | 61 74 65 73 20 74 68 69 | illustr|ates thi|
|00004ec0| 73 20 66 75 6e 64 61 6d | 65 6e 74 61 6c 20 72 65 |s fundam|ental re|
|00004ed0| 73 75 6c 74 2e 20 52 65 | 76 69 65 77 20 73 65 63 |sult. Re|view sec|
|00004ee0| 74 69 6f 6e 20 31 33 2e | 37 2e 20 7d 00 00 00 00 |tion 13.|7. }....|
|00004ef0| 00 00 00 00 01 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004f00| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004f10| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004f20| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004f30| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004f40| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004f50| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004f60| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00004f70| 00 00 00 00 33 01 00 39 | 00 00 00 00 00 00 00 00 |....3..9|........|
|00004f80| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 02 00 02 |........|........|
|00004f90| 00 14 00 7b 5c 66 6f 6e | 74 74 62 6c 7b 5c 66 30 |...{\fon|ttbl{\f0|
|00004fa0| 7d 7b 5c 66 31 7d 7d 00 | 00 8a 00 7b 20 54 68 65 |}{\f1}}.|...{ The|
|00004fb0| 20 63 61 70 69 74 61 6c | 20 61 73 73 65 74 20 70 | capital| asset p|
|00004fc0| 72 69 63 69 6e 67 20 6d | 6f 64 65 6c 20 73 68 6f |ricing m|odel sho|
|00004fd0| 77 73 20 74 68 61 74 20 | 74 68 65 20 65 78 70 65 |ws that |the expe|
|00004fe0| 63 74 65 64 20 72 65 74 | 75 72 6e 20 66 6f 72 20 |cted ret|urn for |
|00004ff0| 61 20 70 61 72 74 69 63 | 75 6c 61 72 20 61 73 73 |a partic|ular ass|
|00005000| 65 74 20 64 6f 65 73 20 | 6e 6f 74 20 64 65 70 65 |et does |not depe|
|00005010| 6e 64 20 6f 6e 20 74 68 | 65 20 70 75 72 65 20 74 |nd on th|e pure t|
|00005020| 69 6d 65 20 76 61 6c 75 | 65 20 6f 66 20 6d 6f 6e |ime valu|e of mon|
|00005030| 65 79 2e 20 7d 08 00 7b | 20 54 72 75 65 20 7d 09 |ey. }..{| True }.|
|00005040| 00 7b 20 46 61 6c 73 65 | 20 7d 00 00 00 00 00 00 |.{ False| }......|
|00005050| 89 00 7b 5c 66 6f 6e 74 | 74 62 6c 7b 5c 66 30 7d |..{\font|tbl{\f0}|
|00005060| 7b 5c 66 31 7d 7d 7b 5c | 44 46 20 41 63 74 75 61 |{\f1}}{\|DF Actua|
|00005070| 6c 6c 79 2c 20 74 68 65 | 20 43 41 50 4d 20 73 68 |lly, the| CAPM sh|
|00005080| 6f 77 73 20 74 68 61 74 | 20 74 68 65 20 65 78 70 |ows that| the exp|
|00005090| 65 63 74 65 64 20 72 65 | 74 75 72 6e 20 64 6f 65 |ected re|turn doe|
|000050a0| 73 20 64 65 70 65 6e 64 | 20 6f 6e 20 74 68 65 20 |s depend| on the |
|000050b0| 74 69 6d 65 20 76 61 6c | 75 65 20 6f 66 20 6d 6f |time val|ue of mo|
|000050c0| 6e 65 79 2e 20 52 65 76 | 69 65 77 20 73 65 63 74 |ney. Rev|iew sect|
|000050d0| 69 6f 6e 20 31 33 2e 37 | 2e 20 7d 2b 00 7b 5c 66 |ion 13.7|. }+.{\f|
|000050e0| 6f 6e 74 74 62 6c 7b 5c | 66 30 7d 7b 5c 66 31 7d |onttbl{\|f0}{\f1}|
|000050f0| 7d 7b 5c 44 46 20 59 6f | 75 20 61 72 65 20 63 6f |}{\DF Yo|u are co|
|00005100| 72 72 65 63 74 21 20 7d | 00 00 00 00 00 00 00 00 |rrect! }|........|
|00005110| 01 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005120| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005130| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005140| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005150| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005160| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005170| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005180| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005190| 33 01 00 39 00 00 00 00 | 00 00 00 00 00 00 00 00 |3..9....|........|
|000051a0| 00 00 00 00 00 00 00 00 | 00 01 00 02 00 14 00 7b |........|.......{|
|000051b0| 5c 66 6f 6e 74 74 62 6c | 7b 5c 66 30 7d 7b 5c 66 |\fonttbl|{\f0}{\f|
|000051c0| 31 7d 7d 00 00 4a 00 7b | 20 42 6f 74 68 20 73 79 |1}}..J.{| Both sy|
|000051d0| 73 74 65 6d 61 74 69 63 | 20 72 69 73 6b 73 20 61 |stematic| risks a|
|000051e0| 6e 64 20 75 6e 73 79 73 | 74 65 6d 61 74 69 63 20 |nd unsys|tematic |
|000051f0| 72 69 73 6b 73 20 61 72 | 65 20 75 6e 61 6e 74 69 |risks ar|e unanti|
|00005200| 63 69 70 61 74 65 64 20 | 65 76 65 6e 74 73 2e 20 |cipated |events. |
|00005210| 7d 08 00 7b 20 54 72 75 | 65 20 7d 09 00 7b 20 46 |}..{ Tru|e }..{ F|
|00005220| 61 6c 73 65 20 7d 00 00 | 00 00 00 00 2b 00 7b 5c |alse }..|....+.{\|
|00005230| 66 6f 6e 74 74 62 6c 7b | 5c 66 30 7d 7b 5c 66 31 |fonttbl{|\f0}{\f1|
|00005240| 7d 7d 7b 5c 44 46 20 59 | 6f 75 20 61 72 65 20 63 |}}{\DF Y|ou are c|
|00005250| 6f 72 72 65 63 74 21 20 | 7d a1 00 7b 5c 66 6f 6e |orrect! |}..{\fon|
|00005260| 74 74 62 6c 7b 5c 66 30 | 7d 7b 5c 66 31 7d 7d 7b |ttbl{\f0|}{\f1}}{|
|00005270| 5c 44 46 20 42 6f 74 68 | 20 61 72 65 20 74 79 70 |\DF Both| are typ|
|00005280| 65 73 20 6f 66 20 73 75 | 72 70 72 69 73 65 73 2e |es of su|rprises.|
|00005290| 20 57 68 69 63 68 20 74 | 79 70 65 20 6f 66 20 73 | Which t|ype of s|
|000052a0| 75 72 70 72 69 73 65 20 | 6d 61 74 74 65 72 73 20 |urprise |matters |
|000052b0| 74 6f 20 77 65 6c 6c 2d | 64 69 76 65 72 73 69 66 |to well-|diversif|
|000052c0| 69 65 64 20 69 6e 76 65 | 73 74 6f 72 73 20 61 6e |ied inve|stors an|
|000052d0| 64 20 77 68 69 63 68 20 | 6f 6e 65 20 64 6f 65 73 |d which |one does|
|000052e0| 20 6e 6f 74 3f 20 52 65 | 76 69 65 77 20 73 65 63 | not? Re|view sec|
|000052f0| 74 69 6f 6e 20 31 33 2e | 34 2e 20 7d 00 00 00 00 |tion 13.|4. }....|
|00005300| 00 00 00 00 01 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005310| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005320| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005330| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005340| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005350| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005360| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005370| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005380| 00 00 00 00 33 01 00 39 | 00 00 00 00 00 00 00 00 |....3..9|........|
|00005390| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 01 00 05 |........|........|
|000053a0| 00 14 00 7b 5c 66 6f 6e | 74 74 62 6c 7b 5c 66 30 |...{\fon|ttbl{\f0|
|000053b0| 7d 7b 5c 66 31 7d 7d 00 | 00 34 00 7b 20 57 68 69 |}{\f1}}.|.4.{ Whi|
|000053c0| 63 68 20 6f 66 20 74 68 | 65 20 66 6f 6c 6c 6f 77 |ch of th|e follow|
|000053d0| 69 6e 67 20 69 73 20 61 | 6e 20 61 63 63 75 72 61 |ing is a|n accura|
|000053e0| 74 65 20 73 74 61 74 65 | 6d 65 6e 74 3f 20 7d 8a |te state|ment? }.|
|000053f0| 00 7b 20 54 6f 20 63 61 | 6c 63 75 6c 61 74 65 20 |.{ To ca|lculate |
|00005400| 74 68 65 20 65 78 70 65 | 63 74 65 64 20 72 69 73 |the expe|cted ris|
|00005410| 6b 20 70 72 65 6d 69 75 | 6d 20 6f 6e 65 20 6e 65 |k premiu|m one ne|
|00005420| 65 64 73 20 74 6f 20 63 | 6f 6d 70 75 74 65 20 74 |eds to c|ompute t|
|00005430| 68 65 20 65 78 70 65 63 | 74 65 64 20 72 65 74 75 |he expec|ted retu|
|00005440| 72 6e 20 6f 6e 20 74 68 | 65 20 72 69 73 6b 79 20 |rn on th|e risky |
|00005450| 61 73 73 65 74 20 61 6e | 64 20 74 68 65 20 72 65 |asset an|d the re|
|00005460| 74 75 72 6e 20 6f 6e 20 | 61 20 72 69 73 6b 20 66 |turn on |a risk f|
|00005470| 72 65 65 20 61 73 73 65 | 74 20 7d 66 00 7b 20 54 |ree asse|t }f.{ T|
|00005480| 68 65 20 72 69 73 6b 20 | 70 72 65 6d 69 75 6d 20 |he risk |premium |
|00005490| 69 73 20 74 68 65 20 64 | 69 66 66 65 72 65 6e 63 |is the d|ifferenc|
|000054a0| 65 20 62 65 74 77 65 65 | 6e 20 74 68 65 20 72 65 |e betwee|n the re|
|000054b0| 74 75 72 6e 20 6f 6e 20 | 61 20 72 69 73 6b 79 20 |turn on |a risky |
|000054c0| 61 73 73 65 74 20 61 6e | 64 20 6f 6e 20 74 68 65 |asset an|d on the|
|000054d0| 20 6d 61 72 6b 65 74 20 | 70 6f 72 74 66 6f 6c 69 | market |portfoli|
|000054e0| 6f 20 7d 6e 00 7b 20 54 | 68 65 20 65 78 70 65 63 |o }n.{ T|he expec|
|000054f0| 74 65 64 20 72 65 74 75 | 72 6e 20 6f 6e 20 61 6e |ted retu|rn on an|
|00005500| 20 61 73 73 65 74 20 69 | 73 20 65 71 75 61 6c 20 | asset i|s equal |
|00005510| 74 6f 20 74 68 65 20 73 | 75 6d 20 6f 66 20 74 68 |to the s|um of th|
|00005520| 65 20 70 6f 73 73 69 62 | 6c 65 20 72 65 74 75 72 |e possib|le retur|
|00005530| 6e 73 20 64 69 76 69 64 | 65 64 20 62 79 20 74 68 |ns divid|ed by th|
|00005540| 65 69 72 20 70 72 6f 62 | 61 62 69 6c 69 74 69 65 |eir prob|abilitie|
|00005550| 73 20 7d 6a 00 7b 20 43 | 6f 6d 70 61 72 69 73 6f |s }j.{ C|ompariso|
|00005560| 6e 20 6f 66 20 74 77 6f | 20 64 69 66 66 65 72 65 |n of two| differe|
|00005570| 6e 74 20 72 69 73 6b 79 | 20 61 73 73 65 74 73 20 |nt risky| assets |
|00005580| 63 61 6e 6e 6f 74 20 62 | 65 20 73 69 6d 70 6c 69 |cannot b|e simpli|
|00005590| 66 69 65 64 20 62 79 20 | 63 6f 6d 70 75 74 69 6e |fied by |computin|
|000055a0| 67 20 74 68 65 20 65 78 | 70 65 63 74 65 64 20 72 |g the ex|pected r|
|000055b0| 65 74 75 72 6e 20 6f 6e | 20 65 61 63 68 20 7d 68 |eturn on| each }h|
|000055c0| 00 7b 20 45 78 70 65 63 | 74 65 64 20 72 65 74 75 |.{ Expec|ted retu|
|000055d0| 72 6e 73 20 64 65 70 65 | 6e 64 20 6f 6e 20 74 68 |rns depe|nd on th|
|000055e0| 65 20 65 78 70 65 63 74 | 65 64 20 73 74 61 74 65 |e expect|ed state|
|000055f0| 73 20 6f 66 20 74 68 65 | 20 65 63 6f 6e 6f 6d 79 |s of the| economy|
|00005600| 20 62 75 74 20 6e 6f 74 | 20 74 68 65 69 72 20 61 | but not| their a|
|00005610| 73 73 6f 63 69 61 74 65 | 64 20 70 72 6f 62 61 62 |ssociate|d probab|
|00005620| 69 6c 69 74 69 65 73 20 | 7d 00 00 00 00 00 00 2b |ilities |}......+|
|00005630| 00 7b 5c 66 6f 6e 74 74 | 62 6c 7b 5c 66 30 7d 7b |.{\fontt|bl{\f0}{|
|00005640| 5c 66 31 7d 7d 7b 5c 44 | 46 20 59 6f 75 20 61 72 |\f1}}{\D|F You ar|
|00005650| 65 20 63 6f 72 72 65 63 | 74 21 20 7d 8b 00 7b 5c |e correc|t! }..{\|
|00005660| 66 6f 6e 74 74 62 6c 7b | 5c 66 30 7d 7b 5c 66 31 |fonttbl{|\f0}{\f1|
|00005670| 7d 7d 7b 5c 44 46 20 54 | 68 65 20 72 69 73 6b 20 |}}{\DF T|he risk |
|00005680| 70 72 65 6d 69 75 6d 20 | 69 73 20 74 68 65 20 64 |premium |is the d|
|00005690| 69 66 66 65 72 65 6e 63 | 65 20 62 65 74 77 65 65 |ifferenc|e betwee|
|000056a0| 6e 20 74 68 65 20 72 69 | 73 6b 79 20 61 73 73 65 |n the ri|sky asse|
|000056b0| 74 27 73 20 72 65 74 75 | 72 6e 20 61 6e 64 20 74 |t's retu|rn and t|
|000056c0| 68 65 20 72 69 73 6b 20 | 66 72 65 65 20 72 61 74 |he risk |free rat|
|000056d0| 65 2e 20 52 65 76 69 65 | 77 20 73 65 63 74 69 6f |e. Revie|w sectio|
|000056e0| 6e 20 31 33 2e 37 2e 20 | 7d 6f 00 7b 5c 66 6f 6e |n 13.7. |}o.{\fon|
|000056f0| 74 74 62 6c 7b 5c 66 30 | 7d 7b 5c 66 31 7d 7d 7b |ttbl{\f0|}{\f1}}{|
|00005700| 5c 44 46 20 54 68 65 20 | 70 6f 73 73 69 62 6c 65 |\DF The |possible|
|00005710| 20 72 65 74 75 72 6e 73 | 20 6d 75 73 74 20 62 65 | returns| must be|
|00005720| 20 6d 75 6c 74 69 70 6c | 69 65 64 20 62 79 20 74 | multipl|ied by t|
|00005730| 68 65 69 72 20 70 72 6f | 62 61 62 69 6c 69 74 69 |heir pro|babiliti|
|00005740| 65 73 2e 20 52 65 76 69 | 65 77 20 73 65 63 74 69 |es. Revi|ew secti|
|00005750| 6f 6e 20 31 33 2e 31 2e | 20 7d 84 00 7b 5c 66 6f |on 13.1.| }..{\fo|
|00005760| 6e 74 74 62 6c 7b 5c 66 | 30 7d 7b 5c 66 31 7d 7d |nttbl{\f|0}{\f1}}|
|00005770| 7b 5c 44 46 20 43 6f 6d | 70 61 72 69 6e 67 20 74 |{\DF Com|paring t|
|00005780| 68 65 20 74 77 6f 20 61 | 73 73 65 74 73 20 62 79 |he two a|ssets by|
|00005790| 20 63 6f 6d 70 61 72 69 | 6e 67 20 74 68 65 69 72 | compari|ng their|
|000057a0| 20 65 78 70 65 63 74 65 | 64 20 72 65 74 75 72 6e | expecte|d return|
|000057b0| 73 20 69 73 20 61 20 72 | 61 74 69 6f 6e 61 6c 20 |s is a r|ational |
|000057c0| 65 78 65 72 63 69 73 65 | 2e 20 52 65 76 69 65 77 |exercise|. Review|
|000057d0| 20 73 65 63 74 69 6f 6e | 20 31 33 2e 31 2e 20 7d | section| 13.1. }|
|000057e0| 73 00 7b 5c 66 6f 6e 74 | 74 62 6c 7b 5c 66 30 7d |s.{\font|tbl{\f0}|
|000057f0| 7b 5c 66 31 7d 7d 7b 5c | 44 46 20 45 78 70 65 63 |{\f1}}{\|DF Expec|
|00005800| 74 65 64 20 72 65 74 75 | 72 6e 73 20 64 65 70 65 |ted retu|rns depe|
|00005810| 6e 64 20 6f 6e 20 62 6f | 74 68 20 74 68 65 20 73 |nd on bo|th the s|
|00005820| 74 61 74 65 73 20 61 6e | 64 20 74 68 65 69 72 20 |tates an|d their |
|00005830| 70 72 6f 62 61 62 69 6c | 69 74 69 65 73 2e 20 52 |probabil|ities. R|
|00005840| 65 76 69 65 77 20 73 65 | 63 74 69 6f 6e 20 31 33 |eview se|ction 13|
|00005850| 2e 31 2e 20 7d 00 00 00 | 00 00 00 00 00 00 00 00 |.1. }...|........|
|00005860| 00 00 00 01 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005870| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005880| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005890| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000058a0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000058b0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000058c0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000058d0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000058e0| 00 00 00 33 01 00 39 00 | 00 00 00 00 00 00 00 00 |...3..9.|........|
|000058f0| 00 00 00 00 00 00 00 00 | 00 00 00 00 04 00 05 00 |........|........|
|00005900| 14 00 7b 5c 66 6f 6e 74 | 74 62 6c 7b 5c 66 30 7d |..{\font|tbl{\f0}|
|00005910| 7b 5c 66 31 7d 7d 00 00 | 11 01 7b 20 54 68 65 20 |{\f1}}..|..{ The |
|00005920| 73 74 6f 63 6b 20 69 6e | 20 53 63 6f 75 6e 64 72 |stock in| Scoundr|
|00005930| 65 6c 2c 20 49 6e 63 2e | 20 73 68 6f 77 73 20 61 |el, Inc.| shows a|
|00005940| 6e 20 68 69 73 74 6f 72 | 69 63 61 6c 20 72 65 74 |n histor|ical ret|
|00005950| 75 72 6e 20 6f 66 20 31 | 33 2e 35 25 20 77 69 74 |urn of 1|3.5% wit|
|00005960| 68 20 61 20 73 74 61 6e | 64 61 72 64 20 64 65 76 |h a stan|dard dev|
|00005970| 69 61 74 69 6f 6e 20 6f | 66 20 32 30 25 2e 20 20 |iation o|f 20%. |
|00005980| 54 68 65 20 70 72 6f 6a | 65 63 74 65 64 20 72 65 |The proj|ected re|
|00005990| 74 75 72 6e 20 6f 6e 20 | 53 63 6f 75 6e 64 72 65 |turn on |Scoundre|
|000059a0| 6c 2c 20 62 61 73 65 64 | 20 6f 6e 20 35 20 70 6f |l, based| on 5 po|
|000059b0| 73 73 69 62 6c 65 20 73 | 74 61 74 65 73 20 6f 66 |ssible s|tates of|
|000059c0| 20 74 68 65 20 65 63 6f | 6e 6f 6d 79 2c 20 69 73 | the eco|nomy, is|
|000059d0| 20 31 35 2e 35 25 20 77 | 69 74 68 20 61 20 73 74 | 15.5% w|ith a st|
|000059e0| 61 6e 64 61 72 64 20 64 | 65 76 69 61 74 69 6f 6e |andard d|eviation|
|000059f0| 20 6f 66 20 32 32 25 2e | 20 20 57 68 69 63 68 20 | of 22%.| Which |
|00005a00| 6f 66 20 74 68 65 20 66 | 6f 6c 6c 6f 77 69 6e 67 |of the f|ollowing|
|00005a10| 20 69 73 20 74 72 75 65 | 20 61 62 6f 75 74 20 74 | is true| about t|
|00005a20| 68 65 20 73 74 6f 63 6b | 3f 20 7d 5d 00 7b 20 54 |he stock|? }].{ T|
|00005a30| 68 65 20 70 72 6f 6a 65 | 63 74 65 64 20 72 65 74 |he proje|cted ret|
|00005a40| 75 72 6e 73 20 6f 66 20 | 53 63 6f 75 6e 64 72 65 |urns of |Scoundre|
|00005a50| 6c 20 6d 75 73 74 20 62 | 65 20 70 6f 73 69 74 69 |l must b|e positi|
|00005a60| 76 65 20 69 6e 20 61 6c | 6c 20 70 6f 73 73 69 62 |ve in al|l possib|
|00005a70| 6c 65 20 73 74 61 74 65 | 73 20 6f 66 20 74 68 65 |le state|s of the|
|00005a80| 20 65 63 6f 6e 6f 6d 79 | 20 7d 7e 00 7b 20 50 72 | economy| }~.{ Pr|
|00005a90| 6f 6a 65 63 74 65 64 20 | 72 65 74 75 72 6e 73 20 |ojected |returns |
|00005aa0| 76 61 72 79 20 6c 65 73 | 73 20 77 69 64 65 6c 79 |vary les|s widely|
|00005ab0| 20 66 72 6f 6d 20 74 68 | 65 20 65 78 70 65 63 74 | from th|e expect|
|00005ac0| 65 64 20 72 65 74 75 72 | 6e 20 74 68 61 6e 20 68 |ed retur|n than h|
|00005ad0| 69 73 74 6f 72 69 63 61 | 6c 20 72 65 74 75 72 6e |istorica|l return|
|00005ae0| 73 20 64 69 64 20 66 72 | 6f 6d 20 74 68 65 20 68 |s did fr|om the h|
|00005af0| 69 73 74 6f 72 69 63 61 | 6c 20 61 76 65 72 61 67 |istorica|l averag|
|00005b00| 65 20 72 65 74 75 72 6e | 20 7d 8f 00 7b 20 49 6e |e return| }..{ In|
|00005b10| 76 65 73 74 6f 72 73 20 | 77 68 6f 20 70 72 65 66 |vestors |who pref|
|00005b20| 65 72 20 69 6e 76 65 73 | 74 6d 65 6e 74 73 20 77 |er inves|tments w|
|00005b30| 69 74 68 20 68 69 67 68 | 20 72 65 74 75 72 6e 73 |ith high| returns|
|00005b40| 20 61 6e 64 20 72 65 6c | 61 74 69 76 65 6c 79 20 | and rel|atively |
|00005b50| 6c 6f 77 20 72 69 73 6b | 20 77 69 6c 6c 20 6c 69 |low risk| will li|
|00005b60| 6b 65 6c 79 20 6e 6f 77 | 20 62 65 20 6d 6f 72 65 |kely now| be more|
|00005b70| 20 69 6e 74 65 72 65 73 | 74 65 64 20 69 6e 20 74 | interes|ted in t|
|00005b80| 68 65 20 73 74 6f 63 6b | 20 74 68 61 6e 20 69 6e |he stock| than in|
|00005b90| 20 74 68 65 20 70 61 73 | 74 20 7d 37 00 7b 20 54 | the pas|t }7.{ T|
|00005ba0| 68 65 20 72 69 73 6b 20 | 70 72 65 6d 69 75 6d 20 |he risk |premium |
|00005bb0| 66 6f 72 20 74 68 65 20 | 73 74 6f 63 6b 20 68 61 |for the |stock ha|
|00005bc0| 73 20 6c 69 6b 65 6c 79 | 20 69 6e 63 72 65 61 73 |s likely| increas|
|00005bd0| 65 64 20 7d 4c 00 7b 20 | 49 6e 76 65 73 74 6f 72 |ed }L.{ |Investor|
|00005be0| 73 20 77 68 6f 20 63 68 | 6f 6f 73 65 20 74 68 69 |s who ch|oose thi|
|00005bf0| 73 20 73 74 6f 63 6b 20 | 73 68 6f 75 6c 64 20 65 |s stock |should e|
|00005c00| 78 70 65 63 74 2c 20 6f | 6e 20 61 76 65 72 61 67 |xpect, o|n averag|
|00005c10| 65 2c 20 74 6f 20 6c 6f | 73 65 20 6d 6f 6e 65 79 |e, to lo|se money|
|00005c20| 20 7d 00 00 00 00 00 00 | 73 00 7b 5c 66 6f 6e 74 | }......|s.{\font|
|00005c30| 74 62 6c 7b 5c 66 30 7d | 7b 5c 66 31 7d 7d 7b 5c |tbl{\f0}|{\f1}}{\|
|00005c40| 44 46 20 54 68 69 73 20 | 69 73 20 6e 6f 74 20 6e |DF This |is not n|
|00005c50| 65 63 65 73 73 61 72 69 | 6c 79 20 74 72 75 65 2e |ecessari|ly true.|
|00005c60| 20 53 6f 6d 65 20 73 74 | 61 74 65 20 72 65 74 75 | Some st|ate retu|
|00005c70| 72 6e 73 20 63 6f 75 6c | 64 20 62 65 20 6e 65 67 |rns coul|d be neg|
|00005c80| 61 74 69 76 65 2e 20 52 | 65 76 69 65 77 20 73 65 |ative. R|eview se|
|00005c90| 63 74 69 6f 6e 20 31 33 | 2e 31 2e 20 7d 99 00 7b |ction 13|.1. }..{|
|00005ca0| 5c 66 6f 6e 74 74 62 6c | 7b 5c 66 30 7d 7b 5c 66 |\fonttbl|{\f0}{\f|
|00005cb0| 31 7d 7d 7b 5c 44 46 20 | 54 68 69 73 20 73 74 61 |1}}{\DF |This sta|
|00005cc0| 74 65 6d 65 6e 74 20 69 | 73 20 69 6e 63 6f 72 72 |tement i|s incorr|
|00005cd0| 65 63 74 20 61 73 20 65 | 76 69 64 65 6e 63 65 64 |ect as e|videnced|
|00005ce0| 20 62 79 20 74 68 65 20 | 66 61 63 74 20 74 68 61 | by the |fact tha|
|00005cf0| 74 20 74 68 65 20 73 74 | 61 6e 64 61 72 64 20 64 |t the st|andard d|
|00005d00| 65 76 69 61 74 69 6f 6e | 20 6f 66 20 72 65 74 75 |eviation| of retu|
|00005d10| 72 6e 20 68 61 73 20 69 | 6e 63 72 65 61 73 65 64 |rn has i|ncreased|
|00005d20| 2e 20 52 65 76 69 65 77 | 20 73 65 63 74 69 6f 6e |. Review| section|
|00005d30| 20 31 33 2e 31 2e 20 7d | 63 00 7b 5c 66 6f 6e 74 | 13.1. }|c.{\font|
|00005d40| 74 62 6c 7b 5c 66 30 7d | 7b 5c 66 31 7d 7d 7b 5c |tbl{\f0}|{\f1}}{\|
|00005d50| 44 46 20 54 68 65 20 74 | 6f 74 61 6c 20 72 69 73 |DF The t|otal ris|
|00005d60| 6b 20 68 61 73 20 61 63 | 74 75 61 6c 6c 79 20 69 |k has ac|tually i|
|00005d70| 6e 63 72 65 61 73 65 64 | 20 69 6e 20 74 68 69 73 |ncreased| in this|
|00005d80| 20 63 61 73 65 2e 20 52 | 65 76 69 65 77 20 73 65 | case. R|eview se|
|00005d90| 63 74 69 6f 6e 20 31 33 | 2e 31 2e 20 7d 2b 00 7b |ction 13|.1. }+.{|
|00005da0| 5c 66 6f 6e 74 74 62 6c | 7b 5c 66 30 7d 7b 5c 66 |\fonttbl|{\f0}{\f|
|00005db0| 31 7d 7d 7b 5c 44 46 20 | 59 6f 75 20 61 72 65 20 |1}}{\DF |You are |
|00005dc0| 63 6f 72 72 65 63 74 21 | 20 7d 78 00 7b 5c 66 6f |correct!| }x.{\fo|
|00005dd0| 6e 74 74 62 6c 7b 5c 66 | 30 7d 7b 5c 66 31 7d 7d |nttbl{\f|0}{\f1}}|
|00005de0| 7b 5c 44 46 20 57 69 74 | 68 20 61 6e 20 65 78 70 |{\DF Wit|h an exp|
|00005df0| 65 63 74 65 64 20 72 65 | 74 75 72 6e 20 6f 66 20 |ected re|turn of |
|00005e00| 31 35 2e 35 25 2c 20 74 | 68 65 72 65 20 69 73 20 |15.5%, t|here is |
|00005e10| 6e 6f 20 62 61 73 69 73 | 20 66 6f 72 20 74 68 69 |no basis| for thi|
|00005e20| 73 20 63 6f 6e 63 6c 75 | 73 69 6f 6e 2e 20 52 65 |s conclu|sion. Re|
|00005e30| 76 69 65 77 20 73 65 63 | 74 69 6f 6e 20 31 33 2e |view sec|tion 13.|
|00005e40| 31 2e 20 7d 00 00 00 00 | 00 00 00 00 00 00 00 00 |1. }....|........|
|00005e50| 00 00 01 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005e60| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005e70| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005e80| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005e90| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005ea0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005eb0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005ec0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|00005ed0| 00 00 33 01 00 39 00 00 | 00 00 00 00 00 00 00 00 |..3..9..|........|
|00005ee0| 00 00 00 00 00 00 00 00 | 00 00 00 02 00 05 00 14 |........|........|
|00005ef0| 00 7b 5c 66 6f 6e 74 74 | 62 6c 7b 5c 66 30 7d 7b |.{\fontt|bl{\f0}{|
|00005f00| 5c 66 31 7d 7d 00 00 5a | 00 7b 20 57 68 69 63 68 |\f1}}..Z|.{ Which|
|00005f10| 20 6f 66 20 74 68 65 20 | 66 6f 6c 6c 6f 77 69 6e | of the |followin|
|00005f20| 67 20 69 73 20 74 72 75 | 65 20 61 62 6f 75 74 20 |g is tru|e about |
|00005f30| 63 6f 6d 70 75 74 69 6e | 67 20 65 78 70 65 63 74 |computin|g expect|
|00005f40| 65 64 20 70 6f 72 74 66 | 6f 6c 69 6f 20 72 65 74 |ed portf|olio ret|
|00005f50| 75 72 6e 20 61 6e 64 20 | 76 61 72 69 61 6e 63 65 |urn and |variance|
|00005f60| 3f 20 7d 9d 00 7b 20 59 | 6f 75 20 6e 65 65 64 20 |? }..{ Y|ou need |
|00005f70| 74 6f 20 63 61 6c 63 75 | 6c 61 74 65 20 74 68 65 |to calcu|late the|
|00005f80| 20 77 65 69 67 68 74 20 | 6f 66 20 65 61 63 68 20 | weight |of each |
|00005f90| 61 73 73 65 74 20 72 65 | 6c 61 74 69 76 65 20 74 |asset re|lative t|
|00005fa0| 6f 20 74 68 65 20 74 6f | 74 61 6c 20 70 6f 72 74 |o the to|tal port|
|00005fb0| 66 6f 6c 69 6f 20 74 6f | 20 63 6f 6d 70 75 74 65 |folio to| compute|
|00005fc0| 20 74 68 65 20 70 6f 72 | 74 66 6f 6c 69 6f 20 72 | the por|tfolio r|
|00005fd0| 65 74 75 72 6e 2c 20 62 | 75 74 20 6e 6f 74 20 74 |eturn, b|ut not t|
|00005fe0| 6f 20 63 6f 6d 70 75 74 | 65 20 74 68 65 20 70 6f |o comput|e the po|
|00005ff0| 72 74 66 6f 6c 69 6f 20 | 76 61 72 69 61 6e 63 65 |rtfolio |variance|
|00006000| 20 7d 59 00 7b 20 50 6f | 72 74 66 6f 6c 69 6f 20 | }Y.{ Po|rtfolio |
|00006010| 72 65 74 75 72 6e 20 63 | 61 6e 20 62 65 20 63 61 |return c|an be ca|
|00006020| 6c 63 75 6c 61 74 65 64 | 20 75 73 69 6e 67 20 74 |lculated| using t|
|00006030| 68 65 20 65 78 70 65 63 | 74 65 64 20 72 65 74 75 |he expec|ted retu|
|00006040| 72 6e 20 61 6e 64 20 77 | 65 69 67 68 74 20 6f 66 |rn and w|eight of|
|00006050| 20 65 61 63 68 20 61 73 | 73 65 74 20 7d 4b 00 7b | each as|set }K.{|
|00006060| 20 59 6f 75 20 6e 65 65 | 64 20 6e 6f 74 20 75 73 | You nee|d not us|
|00006070| 65 20 74 68 65 20 70 6f | 72 74 66 6f 6c 69 6f 20 |e the po|rtfolio |
|00006080| 72 65 74 75 72 6e 20 74 | 6f 20 63 6f 6d 70 75 74 |return t|o comput|
|00006090| 65 20 74 68 65 20 70 6f | 72 74 66 6f 6c 69 6f 20 |e the po|rtfolio |
|000060a0| 76 61 72 69 61 6e 63 65 | 20 7d 56 00 7b 20 54 68 |variance| }V.{ Th|
|000060b0| 65 20 70 6f 72 74 66 6f | 6c 69 6f 20 72 65 74 75 |e portfo|lio retu|
|000060c0| 72 6e 20 61 6e 64 20 76 | 61 72 69 61 6e 63 65 20 |rn and v|ariance |
|000060d0| 61 72 65 20 69 6e 64 65 | 70 65 6e 64 65 6e 74 20 |are inde|pendent |
|000060e0| 6f 66 20 74 68 65 20 70 | 6f 73 73 69 62 6c 65 20 |of the p|ossible |
|000060f0| 73 74 61 74 65 73 20 6f | 66 20 6e 61 74 75 72 65 |states o|f nature|
|00006100| 20 7d 6a 00 7b 20 54 68 | 65 20 70 6f 72 74 66 6f | }j.{ Th|e portfo|
|00006110| 6c 69 6f 20 76 61 72 69 | 61 6e 63 65 20 69 73 20 |lio vari|ance is |
|00006120| 67 65 6e 65 72 61 6c 6c | 79 20 61 20 77 65 69 67 |generall|y a weig|
|00006130| 68 74 65 64 20 61 76 65 | 72 61 67 65 20 6f 66 20 |hted ave|rage of |
|00006140| 74 68 65 20 76 61 72 69 | 61 6e 63 65 73 20 6f 66 |the vari|ances of|
|00006150| 20 74 68 65 20 61 73 73 | 65 74 73 20 69 6e 20 74 | the ass|ets in t|
|00006160| 68 65 20 70 6f 72 74 66 | 6f 6c 69 6f 20 7d 00 00 |he portf|olio }..|
|00006170| 00 00 00 00 89 00 7b 5c | 66 6f 6e 74 74 62 6c 7b |......{\|fonttbl{|
|00006180| 5c 66 30 7d 7b 5c 66 31 | 7d 7d 7b 5c 44 46 20 59 |\f0}{\f1|}}{\DF Y|
|00006190| 6f 75 20 6e 65 65 64 20 | 74 68 65 20 72 65 6c 61 |ou need |the rela|
|000061a0| 74 69 76 65 20 77 65 69 | 67 68 74 73 20 74 6f 20 |tive wei|ghts to |
|000061b0| 63 6f 6d 70 75 74 65 20 | 62 6f 74 68 20 74 68 65 |compute |both the|
|000061c0| 20 65 78 70 65 63 74 65 | 64 20 70 6f 72 74 66 6f | expecte|d portfo|
|000061d0| 6c 69 6f 20 72 65 74 75 | 72 6e 20 61 6e 64 20 76 |lio retu|rn and v|
|000061e0| 61 72 69 61 6e 63 65 2e | 20 52 65 76 69 65 77 20 |ariance.| Review |
|000061f0| 73 65 63 74 69 6f 6e 20 | 31 33 2e 32 2e 20 7d 2b |section |13.2. }+|
|00006200| 00 7b 5c 66 6f 6e 74 74 | 62 6c 7b 5c 66 30 7d 7b |.{\fontt|bl{\f0}{|
|00006210| 5c 66 31 7d 7d 7b 5c 44 | 46 20 59 6f 75 20 61 72 |\f1}}{\D|F You ar|
|00006220| 65 20 63 6f 72 72 65 63 | 74 21 20 7d 8f 00 7b 5c |e correc|t! }..{\|
|00006230| 66 6f 6e 74 74 62 6c 7b | 5c 66 30 7d 7b 5c 66 31 |fonttbl{|\f0}{\f1|
|00006240| 7d 7d 7b 5c 44 46 20 54 | 68 65 20 65 78 70 65 63 |}}{\DF T|he expec|
|00006250| 74 65 64 20 70 6f 72 74 | 66 6f 6c 69 6f 20 76 61 |ted port|folio va|
|00006260| 72 69 61 6e 63 65 20 63 | 61 6e 6e 6f 74 20 62 65 |riance c|annot be|
|00006270| 20 63 6f 6d 70 75 74 65 | 64 20 77 69 74 68 6f 75 | compute|d withou|
|00006280| 74 20 75 73 69 6e 67 20 | 74 68 65 20 65 78 70 65 |t using |the expe|
|00006290| 63 74 65 64 20 70 6f 72 | 74 66 6f 6c 69 6f 20 72 |cted por|tfolio r|
|000062a0| 65 74 75 72 6e 2e 20 52 | 65 76 69 65 77 20 73 65 |eturn. R|eview se|
|000062b0| 63 74 69 6f 6e 20 31 33 | 2e 32 2e 20 7d 5d 00 7b |ction 13|.2. }].{|
|000062c0| 5c 66 6f 6e 74 74 62 6c | 7b 5c 66 30 7d 7b 5c 66 |\fonttbl|{\f0}{\f|
|000062d0| 31 7d 7d 7b 5c 44 46 20 | 42 6f 74 68 20 64 65 70 |1}}{\DF |Both dep|
|000062e0| 65 6e 64 20 6f 6e 20 74 | 68 65 20 70 6f 73 73 69 |end on t|he possi|
|000062f0| 62 6c 65 20 73 74 61 74 | 65 73 20 6f 66 20 6e 61 |ble stat|es of na|
|00006300| 74 75 72 65 2e 20 52 65 | 76 69 65 77 20 73 65 63 |ture. Re|view sec|
|00006310| 74 69 6f 6e 20 31 33 2e | 32 2e 20 7d 6a 00 7b 5c |tion 13.|2. }j.{\|
|00006320| 66 6f 6e 74 74 62 6c 7b | 5c 66 30 7d 7b 5c 66 31 |fonttbl{|\f0}{\f1|
|00006330| 7d 7d 7b 5c 44 46 20 54 | 68 69 73 20 69 73 20 6e |}}{\DF T|his is n|
|00006340| 6f 74 20 63 6f 72 72 65 | 63 74 2e 20 52 65 76 69 |ot corre|ct. Revi|
|00006350| 65 77 20 68 6f 77 20 74 | 6f 20 63 6f 6d 70 75 74 |ew how t|o comput|
|00006360| 65 20 70 6f 72 74 66 6f | 6c 69 6f 20 76 61 72 69 |e portfo|lio vari|
|00006370| 61 6e 63 65 73 20 69 6e | 20 73 65 63 74 69 6f 6e |ances in| section|
|00006380| 20 31 33 2e 32 2e 20 7d | 00 00 00 00 00 00 00 00 | 13.2. }|........|
|00006390| 00 00 00 00 00 00 01 00 | 00 00 00 00 00 00 00 00 |........|........|
|000063a0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000063b0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000063c0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000063d0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000063e0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
|000063f0| 00 00 00 00 00 00 00 00 | 00 00 00 00 00 00 00 00 |........|........|
+--------+-------------------------+-------------------------+--------+--------+
Only 25.0 KB of data is shown above.