INVESTMENT ANALYSIS EXAMINATION QUESTIONS
AND CORRECT ANSWER WWITH EXPLANATION
GRADED A+ STUDY GUIDE SOUTHERN NEW
HAMPSHIRE UNIVERSITY
1. Investment analysis involves:
A. Evaluating assets for investment decisions
B. Only saving money
C. Only spending money
D. Accounting only
Answer: A
Rationale: It assesses investment opportunities.
2. The primary objective of investing is to:
A. Maximize returns with acceptable risk
B. Eliminate risk completely
C. Avoid profit
D. Increase expenses
Answer: A
Rationale: Investing balances risk and return.
3. Risk in investment refers to:
A. Uncertainty of returns
B. Guaranteed profit
C. Fixed income
D. Tax reduction
Answer: A
Rationale: Risk is uncertainty.
4. Return is:
A. Gain or loss from investment
B. Tax paid
C. Expense only
D. Loan amount
Answer: A
Rationale: Return measures performance.
,5. Risk-return tradeoff means:
A. Higher risk may yield higher returns
B. No relationship exists
C. Risk eliminates return
D. Returns are fixed
Answer: A
Rationale: Risk and return are linked.
6. Diversification helps to:
A. Reduce risk
B. Increase risk
C. Eliminate profit
D. Reduce income
Answer: A
Rationale: Spreading reduces risk.
7. Systematic risk is:
A. Market-wide risk
B. Company-specific risk
C. Avoidable risk
D. No risk
Answer: A
Rationale: Affects entire market.
8. Unsystematic risk is:
A. Diversifiable risk
B. Market risk
C. Inflation risk
D. Interest risk
Answer: A
Rationale: Can be reduced.
9. Expected return is:
A. Weighted average of possible returns
B. Guaranteed profit
C. Loss only
D. Expense
Answer: A
Rationale: It is probabilistic.
, 10. Standard deviation measures:
A. Volatility of returns
B. Profit
C. Tax
D. Revenue
Answer: A
Rationale: Measures risk.
11. Variance measures:
A. Spread of returns
B. Profit
C. Income
D. Debt
Answer: A
Rationale: Statistical dispersion.
12. Beta measures:
A. Sensitivity to market movements
B. Profit
C. Tax rate
D. Inflation
Answer: A
Rationale: Measures systematic risk.
13. Beta greater than 1 means:
A. More volatile than market
B. Less volatile
C. No risk
D. Fixed return
Answer: A
Rationale: Higher risk than market.
14. Alpha measures:
A. Excess return over benchmark
B. Total risk
C. Debt level
D. Inflation
Answer: A
Rationale: Performance above benchmark.
AND CORRECT ANSWER WWITH EXPLANATION
GRADED A+ STUDY GUIDE SOUTHERN NEW
HAMPSHIRE UNIVERSITY
1. Investment analysis involves:
A. Evaluating assets for investment decisions
B. Only saving money
C. Only spending money
D. Accounting only
Answer: A
Rationale: It assesses investment opportunities.
2. The primary objective of investing is to:
A. Maximize returns with acceptable risk
B. Eliminate risk completely
C. Avoid profit
D. Increase expenses
Answer: A
Rationale: Investing balances risk and return.
3. Risk in investment refers to:
A. Uncertainty of returns
B. Guaranteed profit
C. Fixed income
D. Tax reduction
Answer: A
Rationale: Risk is uncertainty.
4. Return is:
A. Gain or loss from investment
B. Tax paid
C. Expense only
D. Loan amount
Answer: A
Rationale: Return measures performance.
,5. Risk-return tradeoff means:
A. Higher risk may yield higher returns
B. No relationship exists
C. Risk eliminates return
D. Returns are fixed
Answer: A
Rationale: Risk and return are linked.
6. Diversification helps to:
A. Reduce risk
B. Increase risk
C. Eliminate profit
D. Reduce income
Answer: A
Rationale: Spreading reduces risk.
7. Systematic risk is:
A. Market-wide risk
B. Company-specific risk
C. Avoidable risk
D. No risk
Answer: A
Rationale: Affects entire market.
8. Unsystematic risk is:
A. Diversifiable risk
B. Market risk
C. Inflation risk
D. Interest risk
Answer: A
Rationale: Can be reduced.
9. Expected return is:
A. Weighted average of possible returns
B. Guaranteed profit
C. Loss only
D. Expense
Answer: A
Rationale: It is probabilistic.
, 10. Standard deviation measures:
A. Volatility of returns
B. Profit
C. Tax
D. Revenue
Answer: A
Rationale: Measures risk.
11. Variance measures:
A. Spread of returns
B. Profit
C. Income
D. Debt
Answer: A
Rationale: Statistical dispersion.
12. Beta measures:
A. Sensitivity to market movements
B. Profit
C. Tax rate
D. Inflation
Answer: A
Rationale: Measures systematic risk.
13. Beta greater than 1 means:
A. More volatile than market
B. Less volatile
C. No risk
D. Fixed return
Answer: A
Rationale: Higher risk than market.
14. Alpha measures:
A. Excess return over benchmark
B. Total risk
C. Debt level
D. Inflation
Answer: A
Rationale: Performance above benchmark.
