Exam (elaborations) - econ 101 pfp ch10 complete q&a (2022/2023.)

1. Why is it so difficult to identify a group of assets or other techniques that can fully eliminate portfolio risk? A. They types of assets that can eliminate portfolio risk are only available to professional money managers. B. The lack of a full hedge for the lifetime work-related income streams we call human assets. C. The volatility of portfolio returns over time. D. All of the above. E. None of the above. 2. When a household revises its portfolio, it attempts to establish a risk/return strategy that: A. Minimizes portfolio risk as much as possible while maintaining the current standard of living. B. Will not lead to an audit by the tax authorities. C. Optimizes portfolio income and brings about the highest standard of living possible. D. All of the above. E. None of the above. 3. In practice, we can view risk as: A. The probability of a loss or an outcome that is below expectations. B. The inability to hedge a loss or an outcome that is below expectations. C. The probability that more outcomes are below expectations than above expectations. D. All of the above. E. None of the above. 4. Which of the following defines risk management in practical terms? A. The process by which we identify risks and control them so that we are able to achieve individual goals. B. The process by which we identify risks and eliminate them so that we are able to achieve individual goals. C. The process by which we identify risks and eliminate them so that we are able to achieve societal goals. D. All of the above. E. None of the above. 5. What is the third step of the risk management process? A. Match appropriate risk management tools to exposure. B. Establish exposure. C. Implement. D. Identify available risk management tools. E. None of the above. 6. Which of the following is not a common risk management approach? A. Avoid risk. B. Reduce risk. C. Retain risk. D. Share risk. E. All of the above are common risk managem