AAFM GLO_CWM_LVL_1 Exam - Topic 6 Question 11 Discussion

Actual exam question for AAFM's GLO_CWM_LVL_1 exam

Question #: 11
Topic #: 6

Consider the following information for three stocks, Stock A, Stock B, and Stock C. The returns on each of the three stocks are positively correlated, but they are not perfectly correlated.

Portfolio X has half of its funds invested in Stock A and half invested in Stock B. Portfolio Y has invested its funds equally in each of the three stocks. The risk-free rate is 5%, and the market is in equilibrium.

Which of the following statements is/are correct?

AII and III

BOnly II

CI,II and III

DOnly IV

Show Suggested Answer

Suggested Answer: B

by Alaine at May 06, 2022, 02:36 AM

Limited Time Offer

25%

Off

Get Premium GLO_CWM_LVL_1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Margarett

4 months ago

Portfolio Y seems more balanced with all three stocks!

upvoted 0 times

...

Portia

4 months ago

I think only II is correct, not sure about the others.

upvoted 0 times

...

Lachelle

4 months ago

Wait, why is Stock C not in Portfolio X?

upvoted 0 times

...

Gwenn

5 months ago

Totally agree, that's a solid mix!

upvoted 0 times

...

Daisy

5 months ago

Stocks A and B are half of Portfolio X.

upvoted 0 times

...

Youlanda

5 months ago

Okay, let me think this through. The key information I need to identify is the number of replications, factors, and levels. I'll carefully review the options to determine which one matches the details provided in the question.

upvoted 0 times

...

Kaitlyn

5 months ago

Okay, let's think this through step-by-step. I remember learning about Cpk in class, so I think I can figure this out.

upvoted 0 times

...

Lorean

5 months ago

There was a similar practice question using r_f = 5% and 'market in equilibrium'â€”the portfolio returns lie on the capital market line and are priced consistently.

upvoted 0 times

...