71 Appendix 1 Case Study James Stephenson, age 55 and single, is a surgeon who has accumulated a substantial investment portfolio without a clear...

12. Using figure 1, Curve A is

a.    Optimal Risky Portfolio

b.    Optimal Investor Portfolio

c.     Indifference Curve

d.    Efficient Frontier

e. Inefficient Portfolio

f.      Unattainable Portfolio

g.    Capital Allocation Line

13. Using figure 1, Line B is

a.    Optimal Risky Portfolio

b.    Optimal Investor Portfolio

c.     Indifference Curve

d.    Efficient Frontier

e.    Inefficient Portfolio

f.      Unattainable Portfolio

g.    Capital Allocation Line

14. Using figure 1, Point C is

a.    Optimal Risky Portfolio

b.    Optimal Investor Portfolio

c.     Indifference Curve

d.    Efficient Frontier

e.    Inefficient Portfolio

f.      Unattainable Portfolio

g.    Capital Allocation Line

15. Using figure 1, Curve D is

a.    Optimal Risky Portfolio

b.    Optimal Investor Portfolio

c.     Indifference Curve

d.    Efficient Frontier

e.    Inefficient Portfolio

f.      Unattainable Portfolio

g.    Capital Allocation Line

16. Using figure 1 Point E is

a.    Optimal Risky Portfolio

b.    Optimal Investor Portfolio

c.    Indifference Curve

d.    Efficient Frontier

e.    Inefficient Portfolio

f.     Unattainable Portfolio

g.    Capital Allocation Line

17. Using figure 1, Point F is

a.    Optimal Risky Portfolio

b.    Optimal Investor Portfolio

c.     Indifference Curve

d.    Efficient Frontier

e.    Inefficient Portfolio

f.      Unattainable Portfolio

g.    Capital Allocation Line

18. Using figure 1, Point G is

a.    Optimal Risky Portfolio

b.    Optimal Investor Portfolio

c.     Indifference Curve

d.    Efficient Frontier

e.    Inefficient Portfolio

f.      Unattainable Portfolio

g.    Capital Allocation Line

19. You have calculated the expected returns and betas for a universe of stocks to consider for investment (see figure 2). Using that data and the resulting Security Market Line (SML), you should:

a.     Sell D, E, F

b.    Buy A, and F and do nothing with the others

c.     Buy D, E, and Fand Sell A, B, C

20. Using Table 1 The Sharpe ratio for manager 1 is closest to

a.     1

b.     .5

c.     .7

d.     .25