Exam 12: Financial Return and Risk Concepts

If the expected return on Stock 1 is 6%, and the expected return on Stock 2 is 20%, the expected return on a two-asset portfolio that holds 10% of its funds in Stock 1 and 90% in Stock 2 is:

(Multiple Choice)

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Question 21

Future returns and risk cannot be predicted precisely from past measures.

(True/False)

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Question 22

Unsystematic risk is the risk that cannot be eliminated through diversification.

(True/False)

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Question 23

The risk caused by variations in interest expense unrelated to sales or operating income arising from changes in the level of interest rates in the economy is called:

(Multiple Choice)

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Question 24

If prices in a particular market fully reflect all public and private knowledge, the market is efficient in the:

(Multiple Choice)

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Question 25

Beta measures the variability of an asset's returns relative to the market portfolio.

(True/False)

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Question 26

The effect on revenues and expenses from variations in the value of the U.S. dollar in terms of other currencies is called:

(Multiple Choice)

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Question 27

If the expected return is 10%, the standard deviation is 3%, about 68% of the time returns will be expected to fall between 7% and 13%.

(True/False)

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Question 28

If a financial asset has a historical variance of 16, then its standard deviation must be 4.

(True/False)

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Question 29

Which of the following statements is most correct?

(Multiple Choice)

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Question 30

Research on the weak-form efficient market suggests that:

(Multiple Choice)

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Question 31

If Stock A is considered to be of average risk for the market and Stock B is also considered of average risk for the market, then the

(Multiple Choice)

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Question 32

A stock that went from $120 per share at the beginning of the year to $122 at the end of the year and paid a $1 dividend provided an investor with a ____ return.

(Multiple Choice)

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Question 33

If a market is semi-strong form efficient, it also is by definition weak-form efficient.

(True/False)

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Question 34

Which of the following is not required to compute the expected return of a three-asset portfolio?

(Multiple Choice)

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Question 35

The portfolio that contains all risky assets is known as the:

(Multiple Choice)

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Question 36

The standard deviation of a portfolio is a weighted average of its asset standard deviations.

(True/False)

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Question 37

If IBM has a beta of 1.2 when the risk-free rate is 6% and the expected return on the market portfolio is 18%, the expected return on IBM is:

(Multiple Choice)

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Question 38

Exchange rate risk can be eliminated through diversification.

(True/False)

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Question 39

In an efficient market:

(Multiple Choice)

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Question 40

Showing 21 - 40 of 148

If the expected return on Stock 1 is 6%, and the expected return on Stock 2 is 20%, the expected return on a two-asset portfolio that holds 10% of its funds in Stock 1 and 90% in Stock 2 is:

Future returns and risk cannot be predicted precisely from past measures.

Unsystematic risk is the risk that cannot be eliminated through diversification.

The risk caused by variations in interest expense unrelated to sales or operating income arising from changes in the level of interest rates in the economy is called:

If prices in a particular market fully reflect all public and private knowledge, the market is efficient in the:

Beta measures the variability of an asset's returns relative to the market portfolio.

The effect on revenues and expenses from variations in the value of the U.S. dollar in terms of other currencies is called:

If the expected return is 10%, the standard deviation is 3%, about 68% of the time returns will be expected to fall between 7% and 13%.

If a financial asset has a historical variance of 16, then its standard deviation must be 4.

Which of the following statements is most correct?

Research on the weak-form efficient market suggests that:

If Stock A is considered to be of average risk for the market and Stock B is also considered of average risk for the market, then the

A stock that went from $120 per share at the beginning of the year to $122 at the end of the year and paid a $1 dividend provided an investor with a ____ return.

If a market is semi-strong form efficient, it also is by definition weak-form efficient.

Which of the following is not required to compute the expected return of a three-asset portfolio?

The portfolio that contains all risky assets is known as the:

The standard deviation of a portfolio is a weighted average of its asset standard deviations.

If IBM has a beta of 1.2 when the risk-free rate is 6% and the expected return on the market portfolio is 18%, the expected return on IBM is:

Exchange rate risk can be eliminated through diversification.

In an efficient market:

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Securities and Markets

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

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