AWMA UNIT 3. Risk, Return and
Investment Performance Module Exam
QUESTIONS AND VERIFIED CORRECT
ANSWERS GRADED A+ LATEST 100%
GUARANTEED PASS
According to Gerald Perritt, up to 30 small stock issues are needed to eliminate most
unsystematic risk in a portfolio.
The points on an efficient frontier indicate
the highest returns.
the lowest risks.
the best risk/return balances.
unattainable portfolios. - CORRECT ANSWER-the best risk/return balances.
The best combinations of risk and return are represented as points along the efficient frontier.
, Assume each of the asset classes below has the following correlation to long-term government
bonds:
Treasury bills: .67
Corporate bonds: .81
Large stocks: .37
Small stocks: .12
Which one of the following correctly states the impact of diversification on a portfolio of long-
term government bonds?
Treasury bills provide more diversification than small stocks.
Small stocks provide more diversification than large stocks.
Corporate bonds provide more diversification than large stocks.
There is no diversification effect because all of the correlations are positive. - CORRECT
ANSWER-Small stocks provide more diversification than large stocks.
Because the correlations of small stocks to long-term government bonds are less than that of
large stocks (even though both are positive), small stocks provide more diversification than large
stocks.
Carol Taylor has $10,000 to invest at the end of each year for five years, and she can earn a fixed
rate of 8%. "How much," she asks, "will my money be worth in five years?"
$58,666
Investment Performance Module Exam
QUESTIONS AND VERIFIED CORRECT
ANSWERS GRADED A+ LATEST 100%
GUARANTEED PASS
According to Gerald Perritt, up to 30 small stock issues are needed to eliminate most
unsystematic risk in a portfolio.
The points on an efficient frontier indicate
the highest returns.
the lowest risks.
the best risk/return balances.
unattainable portfolios. - CORRECT ANSWER-the best risk/return balances.
The best combinations of risk and return are represented as points along the efficient frontier.
, Assume each of the asset classes below has the following correlation to long-term government
bonds:
Treasury bills: .67
Corporate bonds: .81
Large stocks: .37
Small stocks: .12
Which one of the following correctly states the impact of diversification on a portfolio of long-
term government bonds?
Treasury bills provide more diversification than small stocks.
Small stocks provide more diversification than large stocks.
Corporate bonds provide more diversification than large stocks.
There is no diversification effect because all of the correlations are positive. - CORRECT
ANSWER-Small stocks provide more diversification than large stocks.
Because the correlations of small stocks to long-term government bonds are less than that of
large stocks (even though both are positive), small stocks provide more diversification than large
stocks.
Carol Taylor has $10,000 to invest at the end of each year for five years, and she can earn a fixed
rate of 8%. "How much," she asks, "will my money be worth in five years?"
$58,666
