FINC 5310 Exam Questions with Correct Answers| Latest Update Guaranteed Success
risk averse dont like risk; must get reward to accept risk; most peoples attitude
risk seeker look for opportunities to take the risk; small percentage of people
risk neutral focused only on reward; small percentage of people
risk possibility that actual out comes will be less than expected
Does a higher variance result in less or greater risk? greater risk
For risk comparison what are the steps calculate expected return, variance using exp return,
std deviation of variance and then coefficient of variation using std dev and exp return
does total risk reduce or increase as we include more stocks in a portfolio reduces
Is market risk constant or variable constant
who created the capital asset pricing model william sharp
security market line linear relationship of risk and return
Required rate of return return needed by investor to accept risk
Beta above market beta aggressive
Beta below market beta defensive
, Beta portfolio weighted average of stock in a portfolio
shifts security market line up or down parrellel to sml inflation
Rm - Rrf slope of security market line
Risk free rate of return market risk premium
slope changes to sml due to market risk/return changes such as investors getting
nervous/scared
People accept more risk to avoid loss than they will to gain true
efficient market hypothesis current price is the best estimate of the true value
Weak form current price reflects all information contained in past prices - TRUE
Semi-strong form current price reflects all information that is publically available and
relevant-Mostly true
Strong form current price reflects all possible info including inside info - false
What affects rate of return 1. amt of exp cash flow, 2. timing of exp cash flow 3. riskiness of
exp cash flow
risk averse dont like risk; must get reward to accept risk; most peoples attitude
risk seeker look for opportunities to take the risk; small percentage of people
risk neutral focused only on reward; small percentage of people
risk possibility that actual out comes will be less than expected
Does a higher variance result in less or greater risk? greater risk
For risk comparison what are the steps calculate expected return, variance using exp return,
std deviation of variance and then coefficient of variation using std dev and exp return
does total risk reduce or increase as we include more stocks in a portfolio reduces
Is market risk constant or variable constant
who created the capital asset pricing model william sharp
security market line linear relationship of risk and return
Required rate of return return needed by investor to accept risk
Beta above market beta aggressive
Beta below market beta defensive
, Beta portfolio weighted average of stock in a portfolio
shifts security market line up or down parrellel to sml inflation
Rm - Rrf slope of security market line
Risk free rate of return market risk premium
slope changes to sml due to market risk/return changes such as investors getting
nervous/scared
People accept more risk to avoid loss than they will to gain true
efficient market hypothesis current price is the best estimate of the true value
Weak form current price reflects all information contained in past prices - TRUE
Semi-strong form current price reflects all information that is publically available and
relevant-Mostly true
Strong form current price reflects all possible info including inside info - false
What affects rate of return 1. amt of exp cash flow, 2. timing of exp cash flow 3. riskiness of
exp cash flow
