©BRAINBARTER 2024/2025
Investments CH 7 Exam Questions With
Verified Answers.
When individuals evaluate their portfolios they should evaluate
All the U.S. and non-U.S. stocks.
All marketable securities.
All marketable securities and other liquid assets.
All assets.
All assets and liabilities. - answer✔All assets and Liabilities
The probability of an adverse outcome is a definition of
Statistics.
Variance.
Random.
Risk.
Semi-variance above the mean. - answer✔Risk
The Markowitz model is based on several assumptions regarding investor behavior. Which of the
following is not such any assumption?
Investors consider each investment alternative as being represented by a probability distribution
of expected returns over some holding
period.
, ©BRAINBARTER 2024/2025
Investors maximize one-period expected utility.
Investors estimate the risk of the portfolio on the basis of the variability of expected returns.
Investors base decisions solely on expected return and risk.
None of the above (that is, all are assumptions of the Markowitz model) - answer✔None of the
above (that is, all are assumptions of the Markowitz model)
Markowitz believes that any asset or portfolio of assets can be described by ____ parameter(s).
One
Two
Three
Four
Five - answer✔Two
Semivariance, when applied to portfolio theory, is concerned with
The square root of deviations from the mean.
All deviations below the mean.
All deviations above the mean.
All deviations.
The summation of the squared deviations from the mean. - answer✔All deviations below the
mean.
The purpose of calculating the covariance between two stocks is to provide a(n) ____ measure of
their movement together.
Absolute
Relative
Indexed
Loglinear
Squared - answer✔Absolute
Investments CH 7 Exam Questions With
Verified Answers.
When individuals evaluate their portfolios they should evaluate
All the U.S. and non-U.S. stocks.
All marketable securities.
All marketable securities and other liquid assets.
All assets.
All assets and liabilities. - answer✔All assets and Liabilities
The probability of an adverse outcome is a definition of
Statistics.
Variance.
Random.
Risk.
Semi-variance above the mean. - answer✔Risk
The Markowitz model is based on several assumptions regarding investor behavior. Which of the
following is not such any assumption?
Investors consider each investment alternative as being represented by a probability distribution
of expected returns over some holding
period.
, ©BRAINBARTER 2024/2025
Investors maximize one-period expected utility.
Investors estimate the risk of the portfolio on the basis of the variability of expected returns.
Investors base decisions solely on expected return and risk.
None of the above (that is, all are assumptions of the Markowitz model) - answer✔None of the
above (that is, all are assumptions of the Markowitz model)
Markowitz believes that any asset or portfolio of assets can be described by ____ parameter(s).
One
Two
Three
Four
Five - answer✔Two
Semivariance, when applied to portfolio theory, is concerned with
The square root of deviations from the mean.
All deviations below the mean.
All deviations above the mean.
All deviations.
The summation of the squared deviations from the mean. - answer✔All deviations below the
mean.
The purpose of calculating the covariance between two stocks is to provide a(n) ____ measure of
their movement together.
Absolute
Relative
Indexed
Loglinear
Squared - answer✔Absolute
