1. Which of these is a measure summarizing the overall past performance of an investment?<\/p>\n
Average return<\/p>\n
Dollar return<\/p>\n
Market return <\/p>\n
Percentage return<\/p>\n
2. Which of the following is the reward investors require for taking risk?<\/p>\n
Market risk premium<\/p>\n
Required return<\/p>\n
Risk-free rate<\/p>\n
Risk premium<\/p>\n
3. Which of the following is defined as the volatility of an investment, which includes firm specific risk as well as market risk?<\/p>\n
Market risk<\/p>\n
Total risk<\/p>\n
Diversifiable risk<\/p>\n
Standard deviation<\/p>\n
4. Which of these is the set of probabilities for all possible occurrences?<\/p>\n
Market probabilities<\/p>\n
Probability distribution<\/p>\n
Probability<\/p>\n
Stock market bubble<\/p>\n
5. Which of these is the investor’s combination of securities that achieves the highest expected return for a given risk level?<\/p>\n
Efficient portfolio<\/p>\n
Total portfolio<\/p>\n
Optimal portfolio<\/p>\n
Modern portfolio<\/p>\n
6. To find the percentage return of an investment:<\/p>\n
divide the dollar return by the investment’s value at the beginning of the period.<\/p>\n
multiply the dollar return by the investment’s value at the beginning of the period.<\/p>\n
multiply the dollar return by the investment’s value at the end of the period.<\/p>\n
divide the dollar return by the investment’s value at the end of the period.<\/p>\n
7. Which of the following is an index that tracks 500 companies, which allows for a great deal of diversification?<\/p>\n
Fortune 500<\/p>\n
Wall Street Journal<\/p>\n
Nasdaq<\/p>\n
S&P 500<\/p>\n
8. Which of these is the line on a graph of return and risk (standard deviation) from the risk-free rate through the market portfolio?<\/p>\n
Efficient market line<\/p>\n
Capital market line<\/p>\n
Efficient market hypothesis<\/p>\n
Capital asset pricing line<\/p>\n
9. Which of the following is a model that includes an equation that relates a stock’s required return to an appropriate risk premium?<\/p>\n
Efficient markets<\/p>\n
Beta<\/p>\n
Behavioral finance<\/p>\n
Asset pricing<\/p>\n
10. Which of the following is data that includes past stock prices and volume, financial statements, corporate news, analyst opinions, etc.?<\/p>\n
Generally accepted accounting principles<\/p>\n
Public information<\/p>\n
Privately held information<\/p>\n
Audited financial statements<\/p>\n
11. Which of the following are the stocks of small companies that are priced below $1 per share?<\/p>\n
Penny stocks<\/p>\n
Hedge fund stocks<\/p>\n
Bargain stocks<\/p>\n
Stock market bubble stocks<\/p>\n
12. TechNo stock was $25 per share at the end of last year. Since then, it paid a $1.50 per share dividend last year. The stock price is currently $23. If you owned 300 shares of TechNo, what was your percent return?<\/p>\n
6 percent<\/p>\n
-2 percent<\/p>\n
6.5 percent <\/p>\n
-8 percent<\/p>\n
13. Which of the following is another term for market risk?<\/p>\n
Modern portfolio risk<\/p>\n
Firm specific risk<\/p>\n
Total risk<\/p>\n
Nondiversifiable risk<\/p>\n
14. Investor enthusiasm causes an inflated bull market that drives prices too high, ending in a dramatic collapse in prices is known as:<\/p>\n
privately held information.<\/p>\n
efficient market.<\/p>\n
behavior finance.<\/p>\n
stock market bubble.<\/p>\n
15. Which of the following is defined as the portion of total risk that is attributable to firm or industry factors and can be reduced through diversification?<\/p>\n
Modern portfolio risk<\/p>\n
Firm specific risk<\/p>\n
Market risk <\/p>\n
Total risk<\/p>\n
16. Which of the following is a true statement?<\/p>\n
If a firm takes on riskier new projects over time, the firm itself will become less risky.<\/p>\n
Firms can quite possibly change their stocks’ risk level by substantially changing their business.<\/p>\n
The risk and return that a firm experienced in the past is also the risk level for its future.<\/p>\n
If a firm takes on less risky new projects over time, the firm itself will become more risky.<\/p>\n
17. Which of these is similar to the Capital Market Line, except that risk is characterized by beta instead of standard deviation?<\/p>\n
Security market line<\/p>\n
Probability market line<\/p>\n
Stock market line<\/p>\n
Market risk line<\/p>\n
18. Which of these includes any capital gain (or loss) that occurred as well as any income that you received from a specific investment?<\/p>\n
Portfolio<\/p>\n
Average return<\/p>\n
Market return<\/p>\n
Dollar return<\/p>\n
19. In theory, which of these is a combination of securities that places the portfolio on the efficient frontier and on a line tangent from the risk-free rate?<\/p>\n
Efficient market<\/p>\n
Market portfolio<\/p>\n
Stock market bubble <\/p>\n
Probability distribution<\/p>\n
20. We commonly measure the risk-return relationship using which of the following?<\/p>\n
Expected returns<\/p>\n
Correlation coefficient<\/p>\n
Coefficient of variation<\/p>\n
Standard deviation<\/p>\n","protected":false},"excerpt":{"rendered":"
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