Question 1

Diversification can effectively reduce risk.Once a portfolio is diversified the type of risk remaining is:

Accepted Answer

A) individual security risk. 
B) riskless security risk. 
C) risk related to the market portfolio. 
D) total standard deviations. 
E) None of the above. 
A) individual security risk. 
B) riskless security risk. 
C) risk related to the market portfolio. 
D) total standard deviations. 
E) None of the above.

Question 2

What is the standard deviation of a portfolio which is comprised of $4,500 invested in stock S and $3,000 in stock T?

Accepted Answer

A) 1.4% 
B) 1.9% 
C) 2.6% 
D) 5.7% 
E) 7.2% 
A) 1.4% 
B) 1.9% 
C) 2.6% 
D) 5.7% 
E) 7.2%

Question 3

The measure of beta associates most closely with:

Accepted Answer

A) idiosyncratic risk. 
B) risk-free return. 
C) systematic risk. 
D) unexpected risk. 
E) unsystematic risk. 
A) idiosyncratic risk. 
B) risk-free return. 
C) systematic risk. 
D) unexpected risk. 
E) unsystematic risk.

Question 4

A risk that affects a large number of assets,each to a greater or lesser degree is called:

Accepted Answer

A) total risk. 
B) systematic risk. 
C) unsystematic risk. 
D) economic risk. 
E) standard error. 
A) total risk. 
B) systematic risk. 
C) unsystematic risk. 
D) economic risk. 
E) standard error.

Question 5

Explain in words what beta is and why it is important.

Accepted Answer

This is a concept check question that re

Diversification can effectively reduce risk.Once a portfolio is diversified the type of risk remaining is:

What is the standard deviation of a portfolio which is comprised of $4,500 invested in stock S and $3,000 in stock T?

The measure of beta associates most closely with:

A risk that affects a large number of assets,each to a greater or lesser degree is called:

Explain in words what beta is and why it is important.

Introduction to Corporate Finance

Financial Statements and Cash Flow

Financial Statements Analysis and Long-Term Planning

Net Present Value and Other Investment Rules

Interest Rates and Bond Valuation

Risk and Return: Lessons From Market History

An Alternative View of Risk and Return: the Arbitrage Pricing Theory

Efficient Capital Markets and Behavioral Challenges

Long-Term Financing: an Introduction

Raising Capital

Options and Corporate Finance

Options and Corporate Finance: Extensions and Applications

Warrants and Convertibles

Derivatives and Hedging Risk

International Corporate Finance

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Exam 11: Return and Risk: the Capital Asset Pricing Model

Diversification can effectively reduce risk.Once a portfolio is diversified the type of risk remaining is:

What is the standard deviation of a portfolio which is comprised of $4,500 invested in stock S and $3,000 in stock T?

The measure of beta associates most closely with:

A risk that affects a large number of assets,each to a greater or lesser degree is called:

Explain in words what beta is and why it is important.

Introduction to Corporate Finance

Financial Statements and Cash Flow

Financial Statements Analysis and Long-Term Planning

Net Present Value and Other Investment Rules

Interest Rates and Bond Valuation

Risk and Return: Lessons From Market History

An Alternative View of Risk and Return: the Arbitrage Pricing Theory

Efficient Capital Markets and Behavioral Challenges

Long-Term Financing: an Introduction

Raising Capital

Options and Corporate Finance

Options and Corporate Finance: Extensions and Applications

Warrants and Convertibles

Derivatives and Hedging Risk

International Corporate Finance

Filters