FIN 461 Exam -1 WITH CORRECT ANSWERS

FIN 461 Exam #1 WITH CORRECT
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ANSWERS

Investors should use a portfolio approach to: - CORRECT
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ANSWERS ✔✔Reduce risk |\ |\




Which of the following is the best reason for an investor to be
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concerned with the composition of a portfolio?
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A. Risk reduction
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B. Downside risk protection
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C. Avoidance of investment disasters - CORRECT ANSWERS
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✔✔Risk reduction |\




With respect to the formation of portfolios, which of the following
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statements is most accurate? |\ |\ |\




A. Portfolios affect risk less than returns
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B. Portfolios affect risk more than returns
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, C. Portfolios affect risk and returns equally - CORRECT ANSWERS
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✔✔Portfolios affect risk more than returns |\ |\ |\ |\ |\




Which of the following institutional investors will most likely have
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the longest time horizon?
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A. Defined benefit plan
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B. University endowment
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C. Life insurance company - CORRECT ANSWERS ✔✔University
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endowment


A defined benefit plan with a large number of retirees is likely
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have a high need for: - CORRECT ANSWERS ✔✔Income
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Which of the following institutional investors is most likely to
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manage investments in mutual funds?|\ |\ |\ |\




A. Insurance Companies
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B. Investment Companies
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C. University Endowments - CORRECT ANSWERS ✔✔Investment
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Companies