solution

solution.

Please answer yes or no to the following statements and briefly explain why

(1) the market portfolio is the same as tangent portfolio;

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(2) Capital Market Line implies that an efficient portfolio with higher return have to bear more volatility (variance) under CAPM Assumption;

(3) Security Market Line implies that a portfolio with higher return have to bear more volatility (variance) under CAPM assumptions;

(4) consider a simple lin- ear regression, Y = a + bx + €, if b = 0, then it means X and Y are uncorrelated;

(5) coupon rate is fixed once the bond is issued;

(6) yield to maturity means that you will have such return on average from the bond.

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