BSAD 180 Final Questions and answers
already passed
The most valuable alternative that is given up if a particular investment is
undertaken is called? - correct answer Opportunity Cost
The risk premium is the difference between expected return on a risky asset
and the return on ____? - correct answer The risk free asset
-Risk Premium = Exp Return - RFR
The expected return on a risky asset depends only on that asset's _______? -
correct answer Systematic Risk
The set of portfolios that have the highest expected return given a particular
level of standard deviation is called _____? - correct answer Efficient Frontier
The maximum growth rate a firm can achieve with no external equity financing
while maintaining a constant debt-equity ratio is called _____? - correct
answer Internal Growth Rate (IGR)
What is the "reward" and what is the "risk" in the reward-to-risk ratio? - correct
answer The reward is the potential profit while the risk is the lost potential of
money invested. The reward is how much you can potentially gain for every
dollar you risk.
-EX: Ratio of 1:3 means risking $1 to potentially make $3
-R=E(r)/SD
-This ratio forms the slope of the red SML line
already passed
The most valuable alternative that is given up if a particular investment is
undertaken is called? - correct answer Opportunity Cost
The risk premium is the difference between expected return on a risky asset
and the return on ____? - correct answer The risk free asset
-Risk Premium = Exp Return - RFR
The expected return on a risky asset depends only on that asset's _______? -
correct answer Systematic Risk
The set of portfolios that have the highest expected return given a particular
level of standard deviation is called _____? - correct answer Efficient Frontier
The maximum growth rate a firm can achieve with no external equity financing
while maintaining a constant debt-equity ratio is called _____? - correct
answer Internal Growth Rate (IGR)
What is the "reward" and what is the "risk" in the reward-to-risk ratio? - correct
answer The reward is the potential profit while the risk is the lost potential of
money invested. The reward is how much you can potentially gain for every
dollar you risk.
-EX: Ratio of 1:3 means risking $1 to potentially make $3
-R=E(r)/SD
-This ratio forms the slope of the red SML line
