If stock returns are normally distributed, the distribution can be completely defined by two numbers. What are they? (page 181 of the book)
What is meant by "the set of efficient portfolios?" (page 185 of the book)
If an investor can borrow and lend at the same rate of interest, should the choice of common stock portfolio depend on the investor's willingness to bear risk? Why or why not? (page 187 of the book)
Write down the capital asset pricing model. (page 189 of the book)
The interest rate is 3% and the expected market return is 8%. What is the expected return on a stock with a beta of 1.2? (pages 189-190 of the book)
You can create a portfolio with a beta of 1.2 by a mixture of borrowing and investing in the market portfolio. What is the expected return on this portfolio if the interest rate is 3% and the expected market return is 8%? (pages 189-191 of the book)
Two groups of stocks appear to have performed much better than the capital asset pricing model would predict. What are they? (pages 194-196 of the book)
State the formula for the arbitrage pricing theory. What are the three steps involved in estimating expected returns using this formula? (pages 199-200 of the book)
State the Fama-French three-factor model. (page 203 of the book)
