Questions from General Investment

Q: What is the efficient frontier? How is it related to the

What is the efficient frontier? How is it related to the attainable set of all possible portfolios? How can it be used with an investor’s utility function to find the optimal portfolio?

Q: Briefly describe each of the following and explain how it is used

Briefly describe each of the following and explain how it is used in technical analysis: a. Breadth of the market b. Short interest c. Odd-lot trading

Q: Define and differentiate among the diversifiable, undiversifiable, and total risk

Define and differentiate among the diversifiable, undiversifiable, and total risk of a portfolio. Which is considered the relevant risk? How is it measured?

Q: Define beta. How can you find the beta of a portfolio

Define beta. How can you find the beta of a portfolio when you know the beta for each of the assets included within it?

Q: Explain how you can reconcile the traditional and modern portfolio approaches.

Explain how you can reconcile the traditional and modern portfolio approaches.

Q: How do you calculate the return and standard deviation of a portfolio

How do you calculate the return and standard deviation of a portfolio? Compare the calculation of a portfolio’s standard deviation to that for a single asset.

Q: What is correlation, and why is it important with respect to

What is correlation, and why is it important with respect to portfolio returns? Describe the characteristics of returns that are (a) positively correlated, (b) negatively correlated, and (c) uncorrela...

Q: What are the main investment attractions of call and put options?

What are the main investment attractions of call and put options? What are the risks?

Q: What is diversification? How does the diversification of risk affect the

What is diversification? How does the diversification of risk affect the risk of the portfolio compared to the risk of the individual assets it contains?

Q: Discuss how the correlation between asset returns affects the risk and return

Discuss how the correlation between asset returns affects the risk and return behavior of the resulting portfolio. Describe the potential range of risk and return when the correlation between two asse...