1) ...........

phase is the stage when investors in their early - to middle earning years attempt to
accumulate assets to satisfy near - term needs, e.g., children's education or the down payment on a
home.
- Accumulation.
2) .......... must be stated in terms of expected returns and risk. An investor's tolerance for risk must
be established before returns objectives can be stated.
- Investment objectives.
3) An investor is absolutely certain of a return of 5 percent, the probability of receiving that return is
90 percent, what's the expected return?
- B. 4.5%
4) An investor puts of his investment in Treasury bills with a yield of 7% and 50% in market
portfolio Mt with a yield of 10% standard deviation of 2% Calculate the return on the portfoli
- C. 8.5%
5) Assume that the nominal return on U.S. government T-bills was 10% during a given year when
the rate of inflation was 4%, calculate the RRFR of return on these T-bills?
- A. 5.7%
6) Assume you bought 100 shares of AZB on January 21, 2019 at $50.00 per share and sold it on
January 21, 2020 for $45.00 per share. What was your holding period yield?
- A.-10%
7) Calculate value of stock has a dividend of 9$ a year and required rate of return of 10%
- B. 90$
8) Consider an investment that cost $50 and is worth $75 after being held for two years, so annual
percentage rate of return is:
- B. 22,24%
9) Current earnings of Stock A of 3$ and a expected growth rate of dividends of 17%, and P/E of 15
so the estimated value of stock is:
- D. 48.15
10) Financial assets can be:
- Debts of the issuer but assets of the holder.
11) If returns of common stock in the past is 11% and the average return of treasury bond is 3.7%,
the risk premium in the past is
- D. 7.3%
12) If two stocks have a correlation coefficient equal to -0.8. What does it mean?
- D. The returns of two stocks moved in the opposite directions
13) If two stocks have the correlation coefficient equal to 0.8. What does it mean?
- The returns of two stocks moved in the same direction.
14) If we had to choose between two risky assets with the same return, which one should we choose?
- Asset has a lower risk.
15) In an investment policy statement, the objectives of an investor are expressed in terms of
- Risk and return.
16) In an investment policy statement the objectives of an investor are expressed in terms of
- B. risk and return
17) In case the variance of return is zero, that mean:
- C. No risk
18) Much of an asset allocation strategy depends on:
- A. the investor's policy statement
19) Must be stated in terms of expected returns and risk. An investor's tolerance for risk must be
established before returns objectives can be stated.
- C. Investment objectives
20) Measures of risk for investment include:
- Variance of returns and coefficient of variation of returns
21) Please rearrange the financial investment process in the correct order: ( 1 ) setting investment
policy, ( 2 ) analyzing securities, ( 3 ) evaluating the performance of the portfolio, ( 4 ) adjusting
the portfolio investment, ( 5 ) establishing the portfolio.
- 1, 2, 5, 4, 3
22) Portfolio P consists of shares X and Y and has an expected return of 25%. Determine the weighting
of X and Y in P. Knowing E(R)-20%, E(R) 40%
- B. 75% X and 25% Y
23) Return on an investment means:
- D. change in wealth resulting from investment
24) Suppose you bought a DM corporate bond on January 25, 2011 for $250, and on January 25, 2014
sold it for $350. What was your annual holding period return?
- A. 1.118
25) The "investor" can be:
- D. an individual, a government, a pension fund, or a corporation
26) The ABC bond has a Par value of $500, a coupon rate of 10%, and a maturity of 6 years. The
required rate of returns in the market is 9%. If you had held this bond for 3 years. How much
will you want to sell this bond?
- C. 512.65
27) The bond AZY has a par value of $1,000, a coupon rate of 9%, and a maturity of 6 years. The
issuer pays the coupon interest two times per year. An investor wants the required rate of return
of 10%. How much will he buy this bond?
- A. 955.68
28) The individual financial plan should be related to:
- A. Age, financial status, future plans, risk aversion characteristics, and needs.
29) The nominal risk-free rate of interest is a function of
- A. The real risk-free rate and the rate of inflation.
30) The Risk is:
- A. the uncertainty that an investment will earn its expected rate of return.
31) The risks caused by internal factors, it is controllable and affects only one industry or one
company, one or several securities, called :
- B. Unsystematic risk
32) The security market line (SML) reflects the combinations between:
- A. Risk & Return
33) The sources of fundamental risk are:
- A. Business risk, Financial risk, Liquidity risk, Exchange rate risk, Country risk
34) The total risk for security can be measured by its:
- C. Standard deviation of returns
35) Three important influences analysis in stock valuation?
- B. Industry, Economic, Company
36) The active investing method is one that:
- Attempt to timing the market.
37) The basic trade - off in the investment process is:
- The trade - off between the anticipated rate of return for a given investment instrument and its
degree of risk.
38) The beta of a security or a portfolio is:
- The systematic risk index of that asset.
39) The influence degree of systematic risk:
- Affects all securities in the market.
40) The nominal risk - free rate of interest is a function of
- The real risk - free rate and the rate of inflation.
41) The risk arises in investment and trading securities is relatives to
- The uncertain of future income
42) The risks caused by internal factors, it is controllable and affects only one industry or one
company, one or several securities, called:
- Unsystematic risk
43) The risk that arises in investment and trading securities is relative to.
- The uncertainty of future income.
44) The slope (Sharpe ratio) of the capital market line is:
- Ratio of the risk premium to the standard deviation of the portfolio.
45) The total risk for security can be measured by its:
- Standard deviation of returns.
46) Two securities have positive covariance means the return of those 2 securities:
- Moving in the same direction.
47) The information of two blue-chip stocks in the market is as follows:
Stock Current price Expected price Expected dividend Beta
A 33 34 1.0 0.8
B 23 26 1.1 1.2
Know that the risk-free rate on the market is 5%, the market risk premium is 4%. Are A and B
overvalued or undervalued?
- A is overvalued and B is undervalued
1) Unsystematic risk is:
- The unique risk of assets that can be eliminated by diversifying the portfolio.
2) Ukraine-Russia crisis is an example of risk premium:
- A. Country risk
3) Unsystematic risk is:
- D. The unique risk of assets can be eliminated by diversifying the portfolio.
4) What's a road map that guides the investment process?
- D. Policy Statement
5) What's right choice?
- B. If estimated stock value > Market price, buy or hold it if you own it
6) What's right definition of Real Risk Free Rate (RRFR)?
- B. Assuming no inflation and no uncertainty about future flows.
7) What is an aggressive investment strategy?
- D. It is a strategy that attempts to improve investment performance by uncovering
undervalued securities and/or reallocating investment assets.
8) What kind ratio match the stock price with recent annual sales, or future sales per share?
- D. P/S
9) What does each point on the CML line represent:
- Market equilibrium at different levels.
10) What does it mean if a security has a ß greater than ß of the market portfolio?
- That security is riskier and its expected return will be greater than the return of the market
portfolio.
11) What is a financial investment?
- Is a form of investment in financial assets, savings, gold, securities ... for compensation of profit
in the future.
12) What is a market portfolio?
- The simulated portfolio has the capital investment ratio in all securities equal to the market rate.
13) What is an aggressive investment strategy?
- It is a strategy that attempts to improve investment performance by uncovering undervalued
securities and/or reallocating investment assets.
14) Which of the following is not a step in the portfolio management process?
- D. Sell all assets and reinvestment proceeds at least once a year.
15) Which of the following statements is false about risk-free assets?
- A. Has a Beta coefficient equal to 1
16) Which of the following statements is false about the portfolio management process
- C. The process of managing an investment portfolio is writing down the policy statement
17) Which of the following statements is false about the role of financial markets?
- D. Contain information, monetary regulation, consumption behavior adjustment
18) Which of the following is not a component of the required rate of return?
- Holding period return.
19) Which of the following statements is false about financial assets?
- Financial assets include: houses, land, securities, technology.
20) Which of the following statements is false about risk - free assets?
- Has a Beta coefficient equal to 1.
21) Which of the following statements is false about the assumptions of the CAPM model?
- Investors will try to diversify portfolios to minimize risk.
22) Which of the following statements is false about the capital market line?
- Each point on the capital market line represents the equilibrium of capital invested in M and RF.
23) Which of the following statements is false about the portfolio management process?
- The process of managing an investment portfolio is writing down the policy statement.
24) Which of the following statements is false about the role of financial markets?
- Contain information, monetary regulation, consumption behavior adjustment.
25) Which of the following is not a step in the portfolio management process?
- Sell all assets and reinvestment proceeds at least once a year.
1. Assume you bought 100 shares of AZB on January 21, 2018 at $60 per share and sold it on
January 21, 2019 for $55 per share. What was your holding period return?
55
-> HPR = 60
= 0.92
2. Suppose you bought a GM corporate bond on January 25, 2011 for $150, and sold it on
January 25, 2014 for $210. What was your annual holding period return?
1
210
-> Annual HPR = ( 150
) = 1.12
3
3. Nominal return on risk-free asset = 5.5%; Expected return for asset i = 14.5%; Expected
return on the market portfolio = 12%. The risk premium for asset i:
-> RPi = 14.5% - 5.5% = 9.0%
4. Nominal return on risk-free asset = 5.5%; Expected return for asset i = 14.5%; Expected
return on the market portfolio = 12%. The risk premium for the market portfolio:
-> RPm = 12% - 5.5% = 6.5%
5. An investor puts 50% of his investment in Treasury bills with a yield of 7% and 50% in
market portfolio M with a yield of 10%, standard deviation 2%. Calculate the return on the
portfolio?
-> E(R) = 50% x 7% + 50% x 10% = 8.5%
6. If returns of common stock in the past is 11% and the average return of treasury bond is
3.7%, the risk premium in the past is
-> The risk premium in the past = 11% - 3.7% = 7.3%
7. Suppose we construct a portfolio D with a ratio of 50% risky assets P and 50% risk-free
assets F. E(RP) = 20%; Ϭp = 25%; RFR = 5%. Calculate the SHARP ratio of the portfolio?
20%−5%
-> Sharp ratio = 25%
= 60%
8. An investor on HCM stock market uses $VND 200 million of his own to buy $VND 100
million of blue chip stock with a profit of 17% and its risk level is 25%, and invests $VND 100
million into a government bond with risk free rate at 7%. He also borrows $VND 50 million at
the interest rate of 5% to invest on government bond. What is the Sharp ratio of his portfolio?
-> E(RP) = 0.5 x 17% + 0.5 x 7% + (-0.25) x 5% = 10.75%
Ϭp = 0.5 x 25% = 12.5%
10.75%−7%
Sharp ratio = 12.5%
= 0.30
9. An investor on HCM stock market uses $VND 200 million of his own to buy $VND 100
million of blue chip stock with a profit of 17% and its risk level is 25%, and invests $VND 100
million into a government bond. What is the Sharp ratio of his portfolio?
-> E(RP) = 0.5 x 17% + 0.5 x 25% = 21%
Ϭp = 0.5 x 25% = 12.5%
21%−17%
Sharp ratio = 12.5%
= 0.32
10. Portfolio A has the Sharp ratio of the portfolio = 0.7; Ϭp = 25%. The portfolio’s risk
premium is:
-> Risk Premium = 0.7 x 25% = 17.5%
11. Portfolio Z consists of shares A and B has an expected return of 20%. Determine the
weighting of A and B in Z. Knowing E(RA) = 15%, E(RB) = 35%.
75% A and 25% B -> E(R) = 20%
-> The weighting = 15% x 75% + 35% x 25% = 20%
12. A person invests $35,000 in a stock with a β of 0.8 and $55,000 in a stock with a β of 1.4. If
there are only two assets in the portfolio, what is the β of this person’s portfolio?
35,000 55,000
-> The β = 35,000+55,000
𝑥0. 8 + 35,000+55,000
𝑥1. 4 = 1.17
13. Assume stocks A and Z have betas of 1.5 and 0.7, respectively; the risk-free return is 7%,
while the market portfolio return is 13.4%. Applying the CAPM model, we have the expected
return of 2 stocks:
-> CAPMA = 7% + 1.5 x (13.4% - 7%) = 16.6%
CAPMZ = 7% + 0.7 x (13.4% - 7%) = 11.48%
14. Known that the risk-free rate on the market is 7%, the market portfolio has risk level of
14% and expected return of 25%. If an investor has risk tolerance about 10%, how does he do
investment?
25%−7%
-> E(RP) = 7% + 10% x 14%
= 19.86%
25%−19.86%
WRF = 25%−7%
= 28.56%
M = 100% - 28.56% = 71.44%
15. The bond AZY has par value of $500, coupon rate of 12%, and the maturity of 10 year. An
investor wants the required rate of return of 10%. How much will he buy this bond?
−10
1−(1+10%)
-> P0 = (500 x 12%) x 10%
+ 500 x (1 + 10%)-10 = 561.45

16. The bond AZY has par value of $1,000, coupon rate of 11%, and the maturity of 5 year.
The required rate of returns in the market is 9%. If you had hold this bond for 3 years. How
much will you want to sell this bond?
−(5−3)
1−(1+9%)
-> P0 = (1,000 x 11%) x 9%
+ 1,000 x (1 + 9%)-(5-3) = 1035.18
17. The bond AZY has par value of $1,000, coupon rate of 9%, and the maturity of 6 year. The
issuer pays the coupon interest two times per year. An investor wants the required rate of
return of 10%. How much will he buy this bond?
10% −2𝑥6
1,000𝑥9% 1−(1+ ) 10% −2𝑥6
-> P0 = 2
x 10%
2
+ 1,000 x (1 + 2
) = 955.68
2

18. Portfolio Z has an expected return of 20%. Knowing WA = 0.75, ϬA = 10%, ϬB = 15% and
βA, B = 0.4. What is the standard deviation of the return on portfolio Z?
2 2 2 2
-> Ϭ = 0. 75 𝑥10% + 0. 25 𝑥15% + 2𝑥0. 75𝑥0. 25𝑥0. 4𝑥10%𝑥15% = 9.6%
19. The investor makes a portfolio Y in which he invests 60% of his own money in VNA and
the rest in HCB. Knowing E(RVNA) is 52.08%, E(RHCB) is 42.69%, correlation coefficient is
2.032, standard deviation of VNA is 47.02%, HCB is 26.7%. Calculate the standard deviation
of return Y.
2 2 2 2
-> Ϭ = 60% 𝑥47. 02% + 40% 𝑥26. 7% + 2𝑥60%𝑥40%𝑥2. 032𝑥47. 02%𝑥26. 7% = 46.2%
20. Fund A has a risky portfolio with year-end cash flows of $50,000 and $150,000 with equal
50% probability; Given that the risk-free rate is 5%, assuming the investor requires a 15%
risk premium, what price should the investor pay for this portfolio?
50,000𝑥50%+150,000𝑥50%
-> 1+15%+5%
= 83.333
21. The security SHB has a capitalization value of 5% of the market, the VN30 indexes account for
40% of the market, how much does SHB account for the VN30 index?
5%
-> 40%
= 12.5%