If you expect the market to increase which of the following portfolios should you purchase?

 If you expect the market to increase which of the following portfolios should you purchase?
Select one:
a. a portfolio with a beta of 1.0
b. a portfolio with a beta of 0
c. a portfolio with a beta of -0.5
d. a portfolio with a beta of 1.9

Answer

The correct option is "d. a portfolio with a beta of 1.9"
Explanation
when you are expecting the market to increase, so you should buy a portfolio whose beta with the market is high. The portfolio with 1.9beta means that if the market increases by 1 then the portfolio will increase by 1.9times.

A firm is evaluating an investment proposal which has an initial investment of $5,000 and cash flows presently valued at $4,000. The net present value of the investment is ______.
Select one:
a. $9,000
b. -$4,000
c. -$1,000
d. $4,000

 Answer

c. -$1,000

Working

Net Present value = Present value of cash flow to be received - Initial Investment

Net Present value = 4000 - 5000

Net Present value = -1000

Thanks