Question 1

Which of the following describes what will occur as you randomly add stocks to your portfolio?

Accepted Answer

A) The nondiversifiable risk will decrease. 
B) Both the diversifiable and nondiversifiable risk will decrease. 
C) The portfolio return will increase. 
D) The diversifiable risk will decrease. 
A) The nondiversifiable risk will decrease. 
B) Both the diversifiable and nondiversifiable risk will decrease. 
C) The portfolio return will increase. 
D) The diversifiable risk will decrease.

Question 2

Which of the following statements is correct?

Accepted Answer

A) The dollar return is a more useful measure to compare performance because it more accurately reflects the change in wealth of the investor. 
B) A dominant portfolio is one that has the highest risk and highest return within a set of portfolios. 
C) By adding stocks to your portfolio, it is possible to effectively eliminate nearly all of the market risk. 
D) None of these choices are correct. 
A) The dollar return is a more useful measure to compare performance because it more accurately reflects the change in wealth of the investor. 
B) A dominant portfolio is one that has the highest risk and highest return within a set of portfolios. 
C) By adding stocks to your portfolio, it is possible to effectively eliminate nearly all of the market risk. 
D) None of these choices are correct.

Question 3

Which of the following is incorrect?

Accepted Answer

A) It is possible to combine assets that all move in the exact same fashion over time and gain the benefits of diversification. 
B) Adding long-term Treasury bonds to a stock portfolio will reduce the risk of the portfolio. 
C) The optimal portfolio is the one with the lowest amount of risk. 
D) All of these choices are correct. 
A) It is possible to combine assets that all move in the exact same fashion over time and gain the benefits of diversification. 
B) Adding long-term Treasury bonds to a stock portfolio will reduce the risk of the portfolio. 
C) The optimal portfolio is the one with the lowest amount of risk. 
D) All of these choices are correct.

Which of the following describes what will occur as you randomly add stocks to your portfolio?

Which of the following statements is correct?

Which of the following is incorrect?

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 the following describes what will occur as you randomly add stocks to your portfolio?

Which of the following statements is correct?

Which of the following is incorrect?

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