Exam 5: Modern Portfolio Concepts

Which of the following represent systematic risks? I. the president of a company suddenly resigns II. the economy goes into a recessionary period III. a company's product is recalled for defects IV. the Federal Reserve unexpectedly changes interest rates

(Multiple Choice)

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Question 21

Coefficients of correlation range from a maximum of +10 to a minimum of -10.

(True/False)

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Question 22

The betas of most stocks are constant over time.

(True/False)

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Question 23

You have gathered the following information concerning a particular investment and conditions in the market. According to the Capital Asset Pricing Model, the required return for this investment is

(Multiple Choice)

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Question 24

By plotting the efficient frontier, investors can find the unique portfolio that is ideal for all investors.

(True/False)

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Question 25

Standard deviation is a measure that indicates how the price of an individual security responds to market forces.

(True/False)

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Question 26

In the real world, most of the assets available to investors

(Multiple Choice)

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Question 27

What is the expected return on a stock with a beta of 1.09, a market risk premium of 8%, and a risk-free rate of 4%?

(Multiple Choice)

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Question 28

Negatively correlated assets reduce risk more than positively correlated assets.

(True/False)

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Question 29

A portfolio consisting of four stocks is expected to produce returns of 9%, 11%, 3% and 17%, respectively, over the next four years. What is the standard deviation of these expected returns?

(Multiple Choice)

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Question 30

A stock's beta value is a measure of

(Multiple Choice)

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Question 31

Dr. Zweibel's portfolio consists of four stocks: AZMN, 35%, beta 2.4; MKR, 20%, beta 1.6; ABDE, 25%, beta 1.8; and SBUK, 20%, beta 2.1. Compute Dr. Z's portfolio beta. Does he seem to be a conservative or aggressive investor?

(Essay)

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Question 32

The best stock to own when the stock market is at a peak and is expected to decline in value is one with a beta of

(Multiple Choice)

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Question 33

The risk of a portfolio consisting of two uncorrelated assets will be

(Multiple Choice)

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Question 34

For stocks with positive betas, higher risk stocks will have higher beta values.

(True/False)

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Question 35

Modern portfolio theory does not consider diversifiable risk relevant because

(Multiple Choice)

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Question 36

Combining uncorrelated assets will

(Multiple Choice)

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Question 37

Both the efficient frontier and beta are important aspects of MPT.

(True/False)

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Question 38

Which one of the following will provide the greatest international diversification?

(Multiple Choice)

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Question 39

Beta is the slope of the best fit line for the points with coordinates representing the and the for each one of several years.

(Multiple Choice)

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Question 40

Showing 21 - 40 of 110

Which of the following represent systematic risks? I. the president of a company suddenly resigns II. the economy goes into a recessionary period III. a company's product is recalled for defects IV. the Federal Reserve unexpectedly changes interest rates

Coefficients of correlation range from a maximum of +10 to a minimum of -10.

The betas of most stocks are constant over time.

You have gathered the following information concerning a particular investment and conditions in the market. According to the Capital Asset Pricing Model, the required return for this investment is

By plotting the efficient frontier, investors can find the unique portfolio that is ideal for all investors.

Standard deviation is a measure that indicates how the price of an individual security responds to market forces.

In the real world, most of the assets available to investors

What is the expected return on a stock with a beta of 1.09, a market risk premium of 8%, and a risk-free rate of 4%?

Negatively correlated assets reduce risk more than positively correlated assets.

A portfolio consisting of four stocks is expected to produce returns of 9%, 11%, 3% and 17%, respectively, over the next four years. What is the standard deviation of these expected returns?

A stock's beta value is a measure of

Dr. Zweibel's portfolio consists of four stocks: AZMN, 35%, beta 2.4; MKR, 20%, beta 1.6; ABDE, 25%, beta 1.8; and SBUK, 20%, beta 2.1. Compute Dr. Z's portfolio beta. Does he seem to be a conservative or aggressive investor?

The best stock to own when the stock market is at a peak and is expected to decline in value is one with a beta of

The risk of a portfolio consisting of two uncorrelated assets will be

For stocks with positive betas, higher risk stocks will have higher beta values.

Modern portfolio theory does not consider diversifiable risk relevant because

Combining uncorrelated assets will

Both the efficient frontier and beta are important aspects of MPT.

Which one of the following will provide the greatest international diversification?

Beta is the slope of the best fit line for the points with coordinates representing the and the for each one of several years.

The Investment Environment

Securities Markets and Transactions

Investment Information and Securities Transactions

Return and Risk

Common Stocks

Analyzing Common Stocks

Stock Valuation

Market Efficiency and Behavioral Finance

Fixed-Income Securities

Bond Valuation

Mutual Funds and Exchange-Traded Funds

Managing Your Own Portfolio

Options: Puts and Calls

Futures Markets and Securities

Filters

Exam 5: Modern Portfolio Concepts

Which of the following represent systematic risks? I. the president of a company suddenly resigns II. the economy goes into a recessionary period III. a company's product is recalled for defects IV. the Federal Reserve unexpectedly changes interest rates

Coefficients of correlation range from a maximum of +10 to a minimum of -10.

The betas of most stocks are constant over time.

You have gathered the following information concerning a particular investment and conditions in the market. According to the Capital Asset Pricing Model, the required return for this investment is

By plotting the efficient frontier, investors can find the unique portfolio that is ideal for all investors.

Standard deviation is a measure that indicates how the price of an individual security responds to market forces.

In the real world, most of the assets available to investors

What is the expected return on a stock with a beta of 1.09, a market risk premium of 8%, and a risk-free rate of 4%?

Negatively correlated assets reduce risk more than positively correlated assets.

A portfolio consisting of four stocks is expected to produce returns of 9%, 11%, 3% and 17%, respectively, over the next four years. What is the standard deviation of these expected returns?

A stock's beta value is a measure of

Dr. Zweibel's portfolio consists of four stocks: AZMN, 35%, beta 2.4; MKR, 20%, beta 1.6; ABDE, 25%, beta 1.8; and SBUK, 20%, beta 2.1. Compute Dr. Z's portfolio beta. Does he seem to be a conservative or aggressive investor?

The best stock to own when the stock market is at a peak and is expected to decline in value is one with a beta of

The risk of a portfolio consisting of two uncorrelated assets will be

For stocks with positive betas, higher risk stocks will have higher beta values.

Modern portfolio theory does not consider diversifiable risk relevant because

Combining uncorrelated assets will

Both the efficient frontier and beta are important aspects of MPT.

Which one of the following will provide the greatest international diversification?

Beta is the slope of the best fit line for the points with coordinates representing the ________ and the ________ for each one of several years.

The Investment Environment

Securities Markets and Transactions

Investment Information and Securities Transactions

Return and Risk

Common Stocks

Analyzing Common Stocks

Stock Valuation

Market Efficiency and Behavioral Finance

Fixed-Income Securities

Bond Valuation

Mutual Funds and Exchange-Traded Funds

Managing Your Own Portfolio

Options: Puts and Calls

Futures Markets and Securities

Filters

Beta is the slope of the best fit line for the points with coordinates representing the and the for each one of several years.