Question 1

Which of these is the investor's combination of securities that achieves the highest expected return for a given risk level?

Accepted Answer

A) efficient portfolio 
B) modern portfolio 
C) optimal portfolio 
D) total portfolio 
A) efficient portfolio 
B) modern portfolio 
C) optimal portfolio 
D) total portfolio

Question 2

Which of these is the dollar return characterized as a percentage of money invested?

Accepted Answer

A) average return 
B) dollar return 
C) market return 
D) percentage return 
A) average return 
B) dollar return 
C) market return 
D) percentage return

Question 3

We commonly measure the risk-return relationship using which of the following?

Accepted Answer

A) coefficient of variation 
B) correlation coefficient 
C) standard deviation 
D) expected returns 
A) coefficient of variation 
B) correlation coefficient 
C) standard deviation 
D) expected returns

Question 4

Which of these is a measure of risk to reward earned by an investment over a specific period of time?

Accepted Answer

A) coefficient of variation 
B) market deviation 
C) standard deviation 
D) total variation 
A) coefficient of variation 
B) market deviation 
C) standard deviation 
D) total variation

Question 5

Compute the standard deviation of Kohl's monthly returns. The past five monthly returns for Kohl's are 5.55 percent, 8.62 percent, -4.44 percent, -1.52 percent, and 9.75 percent.

Accepted Answer

A) 4.92 percent 
B) 5.07 percent 
C) 6.28 percent 
D) 6.12 percent 
A) 4.92 percent 
B) 5.07 percent 
C) 6.28 percent 
D) 6.12 percent

Question 6

The total risk of the S&P 500 Index is equal to

Accepted Answer

A) diversifiable risk. 
B) nondiversifiable risk. 
C) modern portfolio risk. 
D) efficient frontier risk. 
A) diversifiable risk. 
B) nondiversifiable risk. 
C) modern portfolio risk. 
D) efficient frontier risk.

Question 7

Which of the following statements is correct regarding total risk?

Accepted Answer

A) A conglomerate will have more total risk than a firm that has one line of business. 
B) All firms have about the same total risk because they are all exposed to the same market risk. 
C) Total risk can be quantified by measuring the covariance between the firm and the overall market. 
D) None of these choices are correct. 
A) A conglomerate will have more total risk than a firm that has one line of business. 
B) All firms have about the same total risk because they are all exposed to the same market risk. 
C) Total risk can be quantified by measuring the covariance between the firm and the overall market. 
D) None of these choices are correct.

Question 8

Determine which one of these three portfolios dominates another. Name the dominated portfolio and the portfolio that dominates it. Portfolio Blue has an expected return of 13 percent and risk of 17 percent. The expected return and risk of portfolio Yellow are 15 percent and 19 percent; and for the Purple portfolio are 12 percent and 18 percent.

Accepted Answer

A) Portfolio Blue dominates portfolio Yellow. 
B) Portfolio Blue dominates portfolio Purple. 
C) Portfolio Purple dominates portfolio Blue. 
D) Portfolio Purple dominates portfolio Yellow. 
A) Portfolio Blue dominates portfolio Yellow. 
B) Portfolio Blue dominates portfolio Purple. 
C) Portfolio Purple dominates portfolio Blue. 
D) Portfolio Purple dominates portfolio Yellow.

Question 9

Year-to-date, Company Y had earned a 7 percent return. During the same time period, Company R earned 9.25 percent and Company C earned -2.25 percent. If you have a portfolio made up of 35 percent Y, 40 percent R, and 25 percent C, what is your portfolio return?

Accepted Answer

A) 4.6667 percent 
B) 6.1667 percent 
C) 5.5875 percent 
D) 12.6625 percent 
A) 4.6667 percent 
B) 6.1667 percent 
C) 5.5875 percent 
D) 12.6625 percent

Question 10

Interest rates, inflation, and economic growth are economic factors that are examples of

Accepted Answer

A) firm-specific risks that can be diversified away. 
B) market risk. 
C) external factors that are neither firm specific risk nor market risk. 
D) None of these choices are correct. 
A) firm-specific risks that can be diversified away. 
B) market risk. 
C) external factors that are neither firm specific risk nor market risk. 
D) None of these choices are correct.

Question 11

If you invested $30,000 in Disney and $10,000 in Oracle and the two companies returned 6 percent and 12 percent respectively, what was your portfolio's return?

Accepted Answer

A) 18.0 percent 
B) 10.5 percent 
C) 9.0 percent 
D) 7.5 percent 
A) 18.0 percent 
B) 10.5 percent 
C) 9.0 percent 
D) 7.5 percent

Question 12

Which of these is a measure summarizing the overall past performance of an investment?

Accepted Answer

A) average return 
B) dollar return 
C) market return 
D) percentage return 
A) average return 
B) dollar return 
C) market return 
D) percentage return

Question 13

MedTech Corp. stock was $50.95 per share at the end of last year. Since then, it paid a $0.45 per share dividend. The stock price is currently $62.50. If you owned 500 shares of MedTech, what was your percent return?

Accepted Answer

A) 7.20 percent 
B) 8.83 percent 
C) 22.67 percent 
D) 23.55 percent 
A) 7.20 percent 
B) 8.83 percent 
C) 22.67 percent 
D) 23.55 percent

Question 14

Which of the following makes this a true statement: The shape of the efficient frontier implies that

Accepted Answer

A) diminishing returns apply to risk-taking in the investment world. 
B) increasing returns apply to risk-taking in the investment world. 
C) returns are not impacted by risk-taking in the investment world. 
D) None of these choices complete the sentence to make it true. 
A) diminishing returns apply to risk-taking in the investment world. 
B) increasing returns apply to risk-taking in the investment world. 
C) returns are not impacted by risk-taking in the investment world. 
D) None of these choices complete the sentence to make it true.

Question 15

If you own 100 shares of Air Line Inc. at $42.50, 250 shares of BuyRite at $53.25, and 350 shares of MotorCity at $7.75, what are the portfolio weights of each stock?

Accepted Answer

A) Air Line = 0.3333, BuyRite = 0.3333, MotorCity = 0.3333 
B) Air Line = 0.10, BuyRite = 0.25, MotorCity = 0.35 
C) Air Line = 0.2096, BuyRite = 0.6566, MotorCity = 0.1338 
D) Air Line = 0.1429, BuyRite = 0.3571, MotorCity = 0.5000 
A) Air Line = 0.3333, BuyRite = 0.3333, MotorCity = 0.3333 
B) Air Line = 0.10, BuyRite = 0.25, MotorCity = 0.35 
C) Air Line = 0.2096, BuyRite = 0.6566, MotorCity = 0.1338 
D) Air Line = 0.1429, BuyRite = 0.3571, MotorCity = 0.5000

Question 16

The standard deviation of the past five monthly returns for PG Company are 2.75 percent, -0.75 percent, 4.15 percent, 6.29 percent, and 3.84 percent. What is the standard deviation?

Accepted Answer

A) 2.309 percent 
B) 2.581 percent 
C) 3.256 percent 
D) 3.406 percent 
A) 2.309 percent 
B) 2.581 percent 
C) 3.256 percent 
D) 3.406 percent

Question 17

Which of the following is correct regarding the coefficient of variation?

Accepted Answer

A) It measures the amount of standard deviation for each one percent of covariance. 
B) It measures the amount of return achieved for each one percent of risk taken. 
C) It measures the amount of risk taken for each one percent of return achieved. 
D) None of these choices are correct. 
A) It measures the amount of standard deviation for each one percent of covariance. 
B) It measures the amount of return achieved for each one percent of risk taken. 
C) It measures the amount of risk taken for each one percent of return achieved. 
D) None of these choices are correct.

Question 18

The past five monthly returns for Kohl's are 2.55 percent, -8.62 percent, -14.44 percent, -1.52 percent, and 4.75 percent. What is the average monthly return?

Accepted Answer

A) 2.21 percent 
B) 1.21 percent 
C) (-3.46 percent) 
D) (-6.17 percent) 
A) 2.21 percent 
B) 1.21 percent 
C) (-3.46 percent) 
D) (-6.17 percent)

Question 19

Which of the following is correct?

Accepted Answer

A) Over a long time frame, stocks have performed better than long-term Treasury bonds. 
B) Average stock returns are not an indication of what an investor may earn in any one year. 
C) In some years, long-term Treasury bonds performed better than stocks. 
D) All of these choices are correct. 
A) Over a long time frame, stocks have performed better than long-term Treasury bonds. 
B) Average stock returns are not an indication of what an investor may earn in any one year. 
C) In some years, long-term Treasury bonds performed better than stocks. 
D) All of these choices are correct.

Question 20

Which of the following statements is correct?

Accepted Answer

A) A dominant portfolio has the best risk-return relationship as compared to other portfolios. 
B) It is not necessarily true that when an investment achieves a high return that it is risky. 
C) A low standard deviation means that the investment is less likely to achieve high returns, which means that it is more risky. 
D) None of these choices are correct. 
A) A dominant portfolio has the best risk-return relationship as compared to other portfolios. 
B) It is not necessarily true that when an investment achieves a high return that it is risky. 
C) A low standard deviation means that the investment is less likely to achieve high returns, which means that it is more risky. 
D) None of these choices are correct.

Which of these is the investor's combination of securities that achieves the highest expected return for a given risk level?

Which of these is the dollar return characterized as a percentage of money invested?

We commonly measure the risk-return relationship using which of the following?

Which of these is a measure of risk to reward earned by an investment over a specific period of time?

Compute the standard deviation of Kohl's monthly returns. The past five monthly returns for Kohl's are 5.55 percent, 8.62 percent, -4.44 percent, -1.52 percent, and 9.75 percent.

The total risk of the S&P 500 Index is equal to

Which of the following statements is correct regarding total risk?

Year-to-date, Company Y had earned a 7 percent return. During the same time period, Company R earned 9.25 percent and Company C earned -2.25 percent. If you have a portfolio made up of 35 percent Y, 40 percent R, and 25 percent C, what is your portfolio return?

Interest rates, inflation, and economic growth are economic factors that are examples of

If you invested $30,000 in Disney and $10,000 in Oracle and the two companies returned 6 percent and 12 percent respectively, what was your portfolio's return?

Which of these is a measure summarizing the overall past performance of an investment?

MedTech Corp. stock was $50.95 per share at the end of last year. Since then, it paid a $0.45 per share dividend. The stock price is currently $62.50. If you owned 500 shares of MedTech, what was your percent return?

Which of the following makes this a true statement: The shape of the efficient frontier implies that

If you own 100 shares of Air Line Inc. at $42.50, 250 shares of BuyRite at $53.25, and 350 shares of MotorCity at $7.75, what are the portfolio weights of each stock?

The standard deviation of the past five monthly returns for PG Company are 2.75 percent, -0.75 percent, 4.15 percent, 6.29 percent, and 3.84 percent. What is the standard deviation?

Which of the following is correct regarding the coefficient of variation?

The past five monthly returns for Kohl's are 2.55 percent, -8.62 percent, -14.44 percent, -1.52 percent, and 4.75 percent. What is the average monthly return?

Which of the following is correct?

Which of the following statements is correct?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters

Exam 9: Characterizing Risk and Return

Which of these is the investor's combination of securities that achieves the highest expected return for a given risk level?

Which of these is the dollar return characterized as a percentage of money invested?

We commonly measure the risk-return relationship using which of the following?

Which of these is a measure of risk to reward earned by an investment over a specific period of time?

Compute the standard deviation of Kohl's monthly returns. The past five monthly returns for Kohl's are 5.55 percent, 8.62 percent, -4.44 percent, -1.52 percent, and 9.75 percent.

The total risk of the S&P 500 Index is equal to

Which of the following statements is correct regarding total risk?

Year-to-date, Company Y had earned a 7 percent return. During the same time period, Company R earned 9.25 percent and Company C earned -2.25 percent. If you have a portfolio made up of 35 percent Y, 40 percent R, and 25 percent C, what is your portfolio return?

Interest rates, inflation, and economic growth are economic factors that are examples of

If you invested $30,000 in Disney and $10,000 in Oracle and the two companies returned 6 percent and 12 percent respectively, what was your portfolio's return?

Which of these is a measure summarizing the overall past performance of an investment?

MedTech Corp. stock was $50.95 per share at the end of last year. Since then, it paid a $0.45 per share dividend. The stock price is currently $62.50. If you owned 500 shares of MedTech, what was your percent return?

Which of the following makes this a true statement: The shape of the efficient frontier implies that

If you own 100 shares of Air Line Inc. at $42.50, 250 shares of BuyRite at $53.25, and 350 shares of MotorCity at $7.75, what are the portfolio weights of each stock?

The standard deviation of the past five monthly returns for PG Company are 2.75 percent, -0.75 percent, 4.15 percent, 6.29 percent, and 3.84 percent. What is the standard deviation?

Which of the following is correct regarding the coefficient of variation?

The past five monthly returns for Kohl's are 2.55 percent, -8.62 percent, -14.44 percent, -1.52 percent, and 4.75 percent. What is the average monthly return?

Which of the following is correct?

Which of the following statements is correct?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters