Question 1

The risk cause by changes in inflation that affect revenues, expenses and profitability is called:

Accepted Answer

A) interest rate risk 
B) business risk 
C) purchasing power risk 
D) financial risk 
E) none of the above 
A) interest rate risk 
B) business risk 
C) purchasing power risk 
D) financial risk 
E) none of the above

Question 2

During the onset of the Financial Crisis between 2007 and 2008, an investor would have earned the lowest return if he or she had invested in

Accepted Answer

A) only stocks 
B) only Treasury bonds 
C) a portfolio consisting of 50% stocks and 50% Treasury bonds 
D) a non-interest bearing cash account 
E) none of the above 
A) only stocks 
B) only Treasury bonds 
C) a portfolio consisting of 50% stocks and 50% Treasury bonds 
D) a non-interest bearing cash account 
E) none of the above

Question 3

Which of the following statements is most correct?

Accepted Answer

A) the variance of a portfolio is a weighted average of asset variances. 
B) the benefits of diversification are greatest when asset returns have zero correlations. 
C) the market portfolio truly eliminates all unsystematic risk. 
D) beta is the measure of an asset's unsystematic risk. 
A) the variance of a portfolio is a weighted average of asset variances. 
B) the benefits of diversification are greatest when asset returns have zero correlations. 
C) the market portfolio truly eliminates all unsystematic risk. 
D) beta is the measure of an asset's unsystematic risk.

Question 4

A statistical concept that relates movements in one set of returns to movements in another set over time is called:

Accepted Answer

A) variance 
B) standard deviation 
C) coefficient of variation 
D) correlation 
A) variance 
B) standard deviation 
C) coefficient of variation 
D) correlation

Question 5

According to the definitions given in the text, if Stock A has a standard deviation of 4% and Stock B has a standard deviation of 3% which stock is riskier?

Accepted Answer

A) Stock A 
B) Stock B 
C) they are equally risky 
D) cannot determine from the information given 
A) Stock A 
B) Stock B 
C) they are equally risky 
D) cannot determine from the information given

The risk cause by changes in inflation that affect revenues, expenses and profitability is called:

During the onset of the Financial Crisis between 2007 and 2008, an investor would have earned the lowest return if he or she had invested in

Which of the following statements is most correct?

A statistical concept that relates movements in one set of returns to movements in another set over time is called:

According to the definitions given in the text, if Stock A has a standard deviation of 4% and Stock B has a standard deviation of 3% which stock is riskier?

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

The risk cause by changes in inflation that affect revenues, expenses and profitability is called:

During the onset of the Financial Crisis between 2007 and 2008, an investor would have earned the lowest return if he or she had invested in

Which of the following statements is most correct?

A statistical concept that relates movements in one set of returns to movements in another set over time is called:

According to the definitions given in the text, if Stock A has a standard deviation of 4% and Stock B has a standard deviation of 3% which stock is riskier?

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