Exam 6: The Risks and Returns From Investing

Assume you are a U.S.citizen who purchases $20,000 worth of bonds of the Deep Shaft Mining Company in Kenya.What sources of risk can you identify with this investment?

A number of prominent observers expect the equity risk premium in the future to be:

The standard deviation of a security measures the:

When most people refer to mean rate of return,they are referring to the:

In order to determine the compound growth rate of an investment over some period,an investor would calculate the:

If interest rates are expected to rise,you would expect:

If the Dow Jones Industrials had a price appreciation of 6 percent one year and yet total return for the year was 9 percent,the difference would be due to:

What is the best measure of risk for a sole proprietorship?

An impending recession is an example of:

Return and risk are inversely related.

The housing bubble and resulting credit crisis of 2008 is an example of:

Investors should be willing to invest in riskier investments only:

What was the effect on foreign investors owning U.S.stocks when the dollar fell in 2008?

If you invest in German bonds and the Euro becomes stronger during your holding period,then:

Financial risk is most closely associated with:

The returns and risk measures in this chapter are calculated from historical data.Are such measures good predictors of the future?What are some circumstances that could change to impact future return and risk?How can an investor use these return and risk measures to help construct a portfolio?

A major difference between real and nominal returns is that:

New financial disclosure regulations affecting the brokerage industry are a type of:

Which of the following corresponds most closely with an increase in interest rates?

What is the major drawback of a return measure?Why is it the most common return calculation used by investors?