CHAPTER 8 RISK AND RATES OF
RETURN QUESTIONS WITH CORRECT
ANSWERS 2025
TheKchanceKthatKsomeKunfavorableKeventKwillKoccur.K-KcorrectKanswer-Risk
WhatKareK2KinvestorKattitudesKtowardsKrisk?K-KcorrectKanswer-1.KriskKaversion
2.KRiskKPremium
assumesKinvestorKdislikeKriskKandKrequireKhigherKratesKofKreturnKtoKencourageKthemKtoKholdKriskierKsecuriti
es.K-KcorrectKanswer-RiskKAversion
theKdifferenceKbetweenKtheKreturnKonKaKriskyKassetKandKaKrisk-
lessKasset,KwhichKservesKasKcompensationKforKinvestorsKtoKholdKriskierKsecurities.K-KcorrectKanswer-
RiskKPremium
HowKdoKyouKcalculateKreturn?K-KcorrectKanswer-endingKvalue-cost/cost
TheKriskinessKofKanKassetKisKbasedKonKwhat?K-KcorrectKanswer-TheKriskinessKofKtheKcashKflows
WhatKareKtheK2KwaysKanKassetsKriskKcanKbeKanalyzed?K-KcorrectKanswer-1.KStandKAlone
2.KAKPortfolioKContext
analyzingKanKasset'sKcashKflowsKbyKthemselves.K-KcorrectKanswer-StandKAlone
combiningKtheKcashKflowsKfromKdifferentKassets.K-KcorrectKanswer-Portfolio
WhatKareKtheKwaysKyouKcanKquantifyKtheKstandKaloneKrisk?K-KcorrectKanswer-
StandardKdeviationKandKcoefficientKofKvariation
RETURN QUESTIONS WITH CORRECT
ANSWERS 2025
TheKchanceKthatKsomeKunfavorableKeventKwillKoccur.K-KcorrectKanswer-Risk
WhatKareK2KinvestorKattitudesKtowardsKrisk?K-KcorrectKanswer-1.KriskKaversion
2.KRiskKPremium
assumesKinvestorKdislikeKriskKandKrequireKhigherKratesKofKreturnKtoKencourageKthemKtoKholdKriskierKsecuriti
es.K-KcorrectKanswer-RiskKAversion
theKdifferenceKbetweenKtheKreturnKonKaKriskyKassetKandKaKrisk-
lessKasset,KwhichKservesKasKcompensationKforKinvestorsKtoKholdKriskierKsecurities.K-KcorrectKanswer-
RiskKPremium
HowKdoKyouKcalculateKreturn?K-KcorrectKanswer-endingKvalue-cost/cost
TheKriskinessKofKanKassetKisKbasedKonKwhat?K-KcorrectKanswer-TheKriskinessKofKtheKcashKflows
WhatKareKtheK2KwaysKanKassetsKriskKcanKbeKanalyzed?K-KcorrectKanswer-1.KStandKAlone
2.KAKPortfolioKContext
analyzingKanKasset'sKcashKflowsKbyKthemselves.K-KcorrectKanswer-StandKAlone
combiningKtheKcashKflowsKfromKdifferentKassets.K-KcorrectKanswer-Portfolio
WhatKareKtheKwaysKyouKcanKquantifyKtheKstandKaloneKrisk?K-KcorrectKanswer-
StandardKdeviationKandKcoefficientKofKvariation