Sameera Busi 408 Questions & Answers
Can a company pay Yes, if the company has sufficient retained earning
dividends even with or cash reserves, but it may not be sustainable
negative net income? long-term.
Can a company pay Yes, if the company has sufficient retained earning
dividends even with or cash reserves, but it may not be sustainable
negative net income? long-term.
Can a risky asset have a Yes, if its return is uncorrelated with the market;
beta of 0? however, it still has idiosyncratic risk.
Can a risky asset have a Yes, and under CAPM, it would have an expected
negative beta? return below the risk-free rate.
Can portfolio beta be Yes, if the portfolio is diversified and includes low
lower than individual beta or negative-beta assets.
asset betas?
, Sameera Busi 408 Questions & Answers
Can portfolio return be Yes, due to diversification and allocation. Example
greater than every asset A portfolio with options or leverage.
in it?
Can portfolio return be Yes, if negative-weighted assets (e.g., short
less than every asset in positions) offset positive ones.
it?
Can portfolio standard Yes, due to imperfect correlations between asset
deviation be less than returns.
individual assets?
Can the bid price be No, the ask price is always higher than the bid
higher than the ask price price; the spread represents the dealer's profit.
on a Treasury bond?
, Sameera Busi 408 Questions & Answers
Classify: A company's Unsystematic risk.
short-term borrowing
rate rises.
Classify: Manufacturer Unsystematic risk.
loses product liability
lawsuit.
Classify: Oil prices Systematic risk.
unexpectedly decline.
Classify: Oil tanker Unsystematic risk.
rupture causes oil spill.
Classify: Short-term Systematic risk.
interest rates increase
unexpectedly.
Can a company pay Yes, if the company has sufficient retained earning
dividends even with or cash reserves, but it may not be sustainable
negative net income? long-term.
Can a company pay Yes, if the company has sufficient retained earning
dividends even with or cash reserves, but it may not be sustainable
negative net income? long-term.
Can a risky asset have a Yes, if its return is uncorrelated with the market;
beta of 0? however, it still has idiosyncratic risk.
Can a risky asset have a Yes, and under CAPM, it would have an expected
negative beta? return below the risk-free rate.
Can portfolio beta be Yes, if the portfolio is diversified and includes low
lower than individual beta or negative-beta assets.
asset betas?
, Sameera Busi 408 Questions & Answers
Can portfolio return be Yes, due to diversification and allocation. Example
greater than every asset A portfolio with options or leverage.
in it?
Can portfolio return be Yes, if negative-weighted assets (e.g., short
less than every asset in positions) offset positive ones.
it?
Can portfolio standard Yes, due to imperfect correlations between asset
deviation be less than returns.
individual assets?
Can the bid price be No, the ask price is always higher than the bid
higher than the ask price price; the spread represents the dealer's profit.
on a Treasury bond?
, Sameera Busi 408 Questions & Answers
Classify: A company's Unsystematic risk.
short-term borrowing
rate rises.
Classify: Manufacturer Unsystematic risk.
loses product liability
lawsuit.
Classify: Oil prices Systematic risk.
unexpectedly decline.
Classify: Oil tanker Unsystematic risk.
rupture causes oil spill.
Classify: Short-term Systematic risk.
interest rates increase
unexpectedly.
