Exam 10: Investment Basics: Understanding Risk and Return

arrow
  • Select Tags
search iconSearch Question
flashcardsStudy Flashcards
  • Select Tags

Assume that GM common stock has a beta of + 0.8.If you expect the market to go up 20% next year,you should also expect GM's price to go up

(Multiple Choice)
4.7/5
(42)

The historical record of returns and risks shows rather clearly that as investment return increases,so does investment risk.

(True/False)
4.8/5
(32)

The returns on Asset A are strongly,negatively correlated with Asset B's returns;thus,holding the two assets together will

(Multiple Choice)
4.7/5
(38)

You are evaluating two investments,A and B.Data appear below: AB Expected return 10% 12% Highest possible return 20% 14% Lowest possible return 0% - 4% The riskier investment is

(Multiple Choice)
4.7/5
(32)

Examining evidence of returns on common stocks and Treasury bills indicates that common stocks had

(Multiple Choice)
4.9/5
(42)

A dividend reinvestment plan (DRIP)

(Multiple Choice)
4.8/5
(35)

Dollar cost averaging

(Multiple Choice)
4.9/5
(40)

One perspective on risk asserts that the longer an investment is held,the

(Multiple Choice)
4.7/5
(38)

A company loses sales volume because a competitor introduces a better product.This is an example of

(Multiple Choice)
4.9/5
(32)

If the risk-free rate of return increases,required returns on all other securities should increase as well.

(True/False)
4.9/5
(31)

A stock with a 1.5 beta would have 50% more risk than the overall market.

(True/False)
4.8/5
(40)

Historical data suggest a market risk premium of about 20%.

(True/False)
4.9/5
(41)

Over the period 1970 through 2006,the average annual return on stocks was about 11%.

(True/False)
4.9/5
(40)

Holding gold and silver together is probably less risky than holding only one of them with GM stock.

(True/False)
4.8/5
(44)

Which risk item below is not related to changing economic conditions?

(Multiple Choice)
4.8/5
(33)

In order to adequately diversify a portfolio,you need to buy a minimum of ________ securities.

(Multiple Choice)
4.8/5
(35)

If a security's beta is 1.5 and the market return is expected to increase 20%,the security's return should increase 21.5%.

(True/False)
4.8/5
(41)

Evidence shows that returns on corporate stocks and Treasury bills were about equal.

(True/False)
4.8/5
(35)

Inflation risk means that an investment's return might be either higher or lower than the inflation rate.

(True/False)
4.8/5
(35)

Interest-rate risk refers to the potential decline in a security's price as interest rates rise.

(True/False)
4.7/5
(32)
Showing 61 - 80 of 86
close modal

Filters

  • Essay(0)
  • Multiple Choice(0)
  • Short Answer(0)
  • True False(0)
  • Matching(0)