Question 1

Most nondiversifiable risk can be eliminated by creating a portfolio of around 30 stocks.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is false?

Accepted Answer

A) most mutual fund shares are traded on the New York Stock Exchange. 
B) mutual funds hold assets in the form of corporate and government securities in excess of $2 trillion. 
C) the total risk of an asset directly affects the market's return expectations for that asset. 
D) all of the above statements are false. 
A) most mutual fund shares are traded on the New York Stock Exchange. 
B) mutual funds hold assets in the form of corporate and government securities in excess of $2 trillion. 
C) the total risk of an asset directly affects the market's return expectations for that asset. 
D) all of the above statements are false.

Question 3

The variance is the square root of the standard deviation.

Accepted Answer

A) True 
 B)False

Question 4

If someone were able to earn greater than the average returns for the market on a consistent basis,which form of market efficiency is violated?

Accepted Answer

A) weak 
B) semi-strong 
C) strong 
D) both a and b 
A) weak 
B) semi-strong 
C) strong 
D) both a and b

Question 5

The ____________ the coefficient of variation,the ____________ the risk.

Accepted Answer

A) lower,more stable 
B) higher,lower 
C) lower,higher 
D) more stable,higher 
E) none of the above 
A) lower,more stable 
B) higher,lower 
C) lower,higher 
D) more stable,higher 
E) none of the above

Question 6

Standard deviation is the square root of the variance.

Accepted Answer

A) True 
 B)False

Question 7

The relevant measure of risk for a diversified portfolio of assets is the portfolio's level of:

Accepted Answer

A) systematic risk 
B) unsystematic risk 
C) diversifiable risk 
D) company specific risk 
A) systematic risk 
B) unsystematic risk 
C) diversifiable risk 
D) company specific risk

Question 8

A fruit company has 20% returns in periods of normal rainfall and -3% returns in droughts.The probability of normal rainfall is 60% and droughts 40%.What would the fruit company's expected returns be?

Accepted Answer

A) 24% 
B) 10.8% 
C) 0 
D) cannot determine from the information given 
A) 24% 
B) 10.8% 
C) 0 
D) cannot determine from the information given

Question 9

If you invest 40% of your investment in GE with an expected rate of return of 10% and the remainder in IBM with an expected rate of return of 16%,the expected return on your portfolio is:

Accepted Answer

A) 12.4% 
B) 13% 
C) 13.6% 
D) 14.5% 
A) 12.4% 
B) 13% 
C) 13.6% 
D) 14.5%

Question 10

The risk cause 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:

Accepted Answer

A) interest rate risk 
B) business risk 
C) tax risk 
D) none of the above 
A) interest rate risk 
B) business risk 
C) tax risk 
D) none of the above

Most nondiversifiable risk can be eliminated by creating a portfolio of around 30 stocks.

Which of the following statements is false?

The variance is the square root of the standard deviation.

If someone were able to earn greater than the average returns for the market on a consistent basis,which form of market efficiency is violated?

The the coefficient of variation,the the risk.

Standard deviation is the square root of the variance.

The relevant measure of risk for a diversified portfolio of assets is the portfolio's level of:

A fruit company has 20% returns in periods of normal rainfall and -3% returns in droughts.The probability of normal rainfall is 60% and droughts 40%.What would the fruit company's expected returns be?

If you invest 40% of your investment in GE with an expected rate of return of 10% and the remainder in IBM with an expected rate of return of 16%,the expected return on your portfolio is:

The risk cause 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:

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 Valuation

Securities 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

Filters

Exam 12: Financial Return and Risk Concepts

Most nondiversifiable risk can be eliminated by creating a portfolio of around 30 stocks.

Which of the following statements is false?

The variance is the square root of the standard deviation.

If someone were able to earn greater than the average returns for the market on a consistent basis,which form of market efficiency is violated?

The ____________ the coefficient of variation,the ____________ the risk.

Standard deviation is the square root of the variance.

The relevant measure of risk for a diversified portfolio of assets is the portfolio's level of:

A fruit company has 20% returns in periods of normal rainfall and -3% returns in droughts.The probability of normal rainfall is 60% and droughts 40%.What would the fruit company's expected returns be?

If you invest 40% of your investment in GE with an expected rate of return of 10% and the remainder in IBM with an expected rate of return of 16%,the expected return on your portfolio is:

The risk cause 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:

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 Valuation

Securities 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

Filters

The the coefficient of variation,the the risk.