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2.
8.
9.
10.
3. Probability distributions:
a. are always discrete.
b. are always continuous.
c. can be either discrete or continuous.
d. are inverse to interest rates.: c. can be either discrete or
continuous.
11.
6.
a. Liquidity of positions.
b. Investor preferences are based only on expected
return and risk.
c. Low transactions costs.
d. A single investment period.: d. A single investment
period.
5.
portfolio theory?
4.
3.
7.
12.
13.
14.
20.
a. aggressive investors.
b. conservative investors.
c. risk-averse investors.
d. defensive investors.: a. aggressive investors.
21.
a. optimal.
b. unattainable.
c. dominant.
d. dominated.: d. dominated.
16.
22.
18.
23.
a. 0 to +1.0
b. 0 to +2.0
c. -1.0 to 0
d. -1.0 to +1.0: d. -1.0 to +1.0
a. zero.
b. the weighted average of the individual securities risk.
c. equal to the correlation coefficient between the
securities.
d. infinite.: b. the weighted average of the individual securities
risk.
24.
19.
a. lowest risk.
b. highest risk.
c. highest utility.
d. least investment.: c. highest utility.
17.
described as
15.
return of a portfolio?
25.
26.
32.
a. nondiversifiable risk.
b. market risk.
c. random risk.
d. company-specific risk.: d. company-specific risk.
33.
a. positive.
b. negative.
c. zero.
d. impossible to determine.: a. positive.
34.
35.
a. a hostile takeover
b. a rise in inflation
c. a fall in GDP
d. a panic on Wall Street: a. a hostile takeover
applications of:
30.
31.
36.
37.
29.
a. parameter.
b. unique part.
c. error term.
d. beta.: c. error term.
38.
39.
40.
47.
a. expected return.
b. risk.
c. expected return and risk.
d. transactions costs.: c. expected return and risk.
41.
42.
48.
49.
45.
46.
51.
a. supply; demand
b. control; non-control
c. company-related; industry-related
d. micro; macro: d. micro; macro
52.
44.
53.
54.
55.
56.
Which of the following is the correct calculation for the required rate of
return under the CAPM?
a. beta (market risk premium)
b. beta + market risk premium
c. risk-free rate + risk premium
d. risk-free rate(market risk premium): risk-free rate + risk premium
57.
58.
59.
Which of the following statements regarding portfolio risk and number of stocks is generally true?
a. Adding more stocks increases risk.
b. Adding more stocks decreases risk but does not eliminate it.
c. Adding more stocks has no effect on risk.
d. Adding more stocks increases only systematic risk.: b. Adding more stocks decreases risk but does not eliminate it.