Exam 12: Financial Return and Risk Concepts

If the market rate of return is 12%, and the beta on Consolidated Edison is .8, the return on Con Ed is:

A weak-form efficient market is one in which prices reflect all public and private knowledge, including past and current information.

The coefficient of variation cannot be negative.

If the _____________ of a stock is known, an investor can use the security market line to determine the expected return on that stock.

Which of the following statements is false?

If the expected returns for Stock A are 3% and this year's returns are 3%, next year's returns would be

If the variance in returns for Stock A is 400% and the expected return is 5%, then the coefficient of variation is:

Exchange rate risk is the effect on revenues and expenses from variations in the value of the U.S. dollar in terms of other currencies.

A market system that allows for quick execution of customers' trades is said to be informationally efficient.

In an efficient market which of the following would not be expected to cause a quick price change in the stock of a company?

The term "ex-ante" refers to expected or forecasted information.

Which of the following statements is most correct?

Although gold is a risky investment by itself, including gold in a stock portfolio can make the portfolio less risky.

Event risk can be eliminated through diversification.

Positive correlation is when asset returns are rising.

A weak-form efficient market is a market in which prices reflect all past information.

Unsystematic risk is also known as:

If the variance for Stock A is greater than the variance for Stock B, then the standard deviation for Stock A:

The coefficient of variation measures the risk per unit of return.

In an efficient market, both expected and unexpected news should cause stock prices to move up or down.