Fund JKL has a mean return of 8% and a standard deviation of 12, and its returns are evenly
distributed.This would mean that 68% of the time its returns would fall between
a. -4% and +20%
b. +4% and +20%
c. -8% and +8%
d. -16% and +32% - CORRECT ANS - a. -4% and +20%
Assuming the market is currently returning 12% and the beta of your stock is .8. What percentage
return can you expect on your stock?
a. 2.4%
b. 8.0%
c. 9.6%
d. 14.4% - CORRECT ANS - c. 9.6%
Jezebel owns four stocks in various industries. She has come to you to assess the risk she is
taking.You inform her that her portfolio is subject to which one of the following types of risk, and
why?
a. purchasing power risk, because stocks fluctuate with inflation.
b. systematic risk, because the stocks she owns are in various industries.
c. political risk, since companies are subject to the laws of the countries in which they operate
d. unsystematic risk, because she owns only four stocks. - CORRECT ANS - d. unsystematic risk,
because she owns only four stocks.
Which one of the following statements is correct?
, a. Reinvestment, exchange rate, and liquidity risk are examples of systematic risk.
b. Default, purchasing power, and political risk are examples of nondiversifiable risk.
c. A company without debt will have no financial risk, but will have business risk, which is a type of
unsystematic risk.
d. Default, call, and liquidity risk are unique to bonds and not applicable to stocks. - CORRECT ANS
- c. A company without debt will have no financial risk, but will have business risk, which is a type of
unsystematic risk.
Beta is a measure of a stock's
a. range of returns
b. total risk
c. variability
d. volatility - CORRECT ANS - d. volatility
Hector has been investing for years, and has approximately three quarters of his portfolio invested in
stock index and bond index funds, which he rebalances periodically. He has the remainder of his
portfolio invested in oil and health care stocks, which he believes provide above-average price
appreciation potential over the next few years.His style of asset allocation would be best described as
a. strategic
b. tactical
c. dynamic
d. core/satellite - CORRECT ANS - d. core/satellite
An investor has a 6%, $10,000 par value bond that matures in 15 years. The yield to maturity on
similar bonds currently is 5.5%. What is the price of this bond?
a. $1,050.62
b. $5,779.16
c. $9,509.99
d. $10, 506.23 - CORRECT ANS - d. $10, 506.23
distributed.This would mean that 68% of the time its returns would fall between
a. -4% and +20%
b. +4% and +20%
c. -8% and +8%
d. -16% and +32% - CORRECT ANS - a. -4% and +20%
Assuming the market is currently returning 12% and the beta of your stock is .8. What percentage
return can you expect on your stock?
a. 2.4%
b. 8.0%
c. 9.6%
d. 14.4% - CORRECT ANS - c. 9.6%
Jezebel owns four stocks in various industries. She has come to you to assess the risk she is
taking.You inform her that her portfolio is subject to which one of the following types of risk, and
why?
a. purchasing power risk, because stocks fluctuate with inflation.
b. systematic risk, because the stocks she owns are in various industries.
c. political risk, since companies are subject to the laws of the countries in which they operate
d. unsystematic risk, because she owns only four stocks. - CORRECT ANS - d. unsystematic risk,
because she owns only four stocks.
Which one of the following statements is correct?
, a. Reinvestment, exchange rate, and liquidity risk are examples of systematic risk.
b. Default, purchasing power, and political risk are examples of nondiversifiable risk.
c. A company without debt will have no financial risk, but will have business risk, which is a type of
unsystematic risk.
d. Default, call, and liquidity risk are unique to bonds and not applicable to stocks. - CORRECT ANS
- c. A company without debt will have no financial risk, but will have business risk, which is a type of
unsystematic risk.
Beta is a measure of a stock's
a. range of returns
b. total risk
c. variability
d. volatility - CORRECT ANS - d. volatility
Hector has been investing for years, and has approximately three quarters of his portfolio invested in
stock index and bond index funds, which he rebalances periodically. He has the remainder of his
portfolio invested in oil and health care stocks, which he believes provide above-average price
appreciation potential over the next few years.His style of asset allocation would be best described as
a. strategic
b. tactical
c. dynamic
d. core/satellite - CORRECT ANS - d. core/satellite
An investor has a 6%, $10,000 par value bond that matures in 15 years. The yield to maturity on
similar bonds currently is 5.5%. What is the price of this bond?
a. $1,050.62
b. $5,779.16
c. $9,509.99
d. $10, 506.23 - CORRECT ANS - d. $10, 506.23
