FIN 300 Midterm #2 Question and
answers already passed 2025
Risk - correct answer ✔- a measure of how certain you are that you will
receive a particular return
- Higher = Less Certain
- SD
Unsystematic Risk - correct answer ✔Can be eliminated with diversification
with individual asset
Systematic Risk - correct answer ✔Cannot be eliminated with diversification
with individual asset
Rate of Return - correct answer ✔what you earn on an investment in %
terms
Holding Period of Return (HPR) - correct answer ✔- the return on investment
- total return on a asset over a period of time
- Capital Appreciation (CA) & Income Return (IR)
Standard Deviation (SD) - correct answer ✔- Measures the dispersion about
the mean
- How easy it is to get values way above or below the average
- How spread out the data points are
Scenarios - correct answer ✔- based on expectations of the future
, - no historical data
Expected Return - correct answer ✔the average of the possible returns from
an investment, where each return is weighted by the probability that it will
occur
Variance - correct answer ✔- a measure of uncertainty associated with an
outcome
- Measures how far each number is in the mean
Arithmetic Average - correct answer ✔the return earned in an average period
Geometric/Compound Average - correct answer ✔the average compounded
earned by an investor Sensitive to variation in returns over time
Portfolio - correct answer ✔the collection of assets an investor owns
Diversification - correct answer ✔reducing risk by investing in two or more
assets whose values do not always move in the same direction at the same
time
Coefficient of Variation (CV) - correct answer ✔- a measure of the risk
associated with an investment for each 1% of expected return
- a statistical measure of dispersion of data points in a series around the mean
The Sharpe Ratio (S) - correct answer ✔- a measure of the return per unit of
risk for an investment
- Capital asset pricing model
- Inverse of the modified coefficient of variation
answers already passed 2025
Risk - correct answer ✔- a measure of how certain you are that you will
receive a particular return
- Higher = Less Certain
- SD
Unsystematic Risk - correct answer ✔Can be eliminated with diversification
with individual asset
Systematic Risk - correct answer ✔Cannot be eliminated with diversification
with individual asset
Rate of Return - correct answer ✔what you earn on an investment in %
terms
Holding Period of Return (HPR) - correct answer ✔- the return on investment
- total return on a asset over a period of time
- Capital Appreciation (CA) & Income Return (IR)
Standard Deviation (SD) - correct answer ✔- Measures the dispersion about
the mean
- How easy it is to get values way above or below the average
- How spread out the data points are
Scenarios - correct answer ✔- based on expectations of the future
, - no historical data
Expected Return - correct answer ✔the average of the possible returns from
an investment, where each return is weighted by the probability that it will
occur
Variance - correct answer ✔- a measure of uncertainty associated with an
outcome
- Measures how far each number is in the mean
Arithmetic Average - correct answer ✔the return earned in an average period
Geometric/Compound Average - correct answer ✔the average compounded
earned by an investor Sensitive to variation in returns over time
Portfolio - correct answer ✔the collection of assets an investor owns
Diversification - correct answer ✔reducing risk by investing in two or more
assets whose values do not always move in the same direction at the same
time
Coefficient of Variation (CV) - correct answer ✔- a measure of the risk
associated with an investment for each 1% of expected return
- a statistical measure of dispersion of data points in a series around the mean
The Sharpe Ratio (S) - correct answer ✔- a measure of the return per unit of
risk for an investment
- Capital asset pricing model
- Inverse of the modified coefficient of variation
