Test
Chpt 10 pt 2
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Preguntas del test (35)
1Stand-alone = Portfolio + Diversifiable
risk risk r isk- AStand-alone = Greek Yogurt + Diversifiable
- BStand-alone = Portfolio + Diversifiable
- CStand-alone = Paper + Diversifiable
2Two of the most important financial analysis concepts are risk and return.
- Arate and return
- Brisk and return
3 What is financial risk, how is it measured, and why is it so important to financial decision making?
- Aimportant to financial decision making?
- Bimportant to no financial decision making?
4The risk of a portfolio (sp) decreases as more and more investments are randomly added.
- AVerdadero
- BFalso
5The risk of a portfolio (sp) -------- as more and more investments are randomly added.
- Adecreases
- Bincreases
6The risk of a portfolio (sp) decreases as more and more investments are randomly added.
However, the incremental risk reduction from each new investment decreases as more assets are added.
Considerable risk remains regardless of the number of assets added.
However, the incremental risk reduction from each new investment --- as more assets are added.- Aincrease
- Bdecrease
7Considerable risk remains regardless of the number of assets added.
- Aremain
- Bdoesnt remain
8Stand-alone risk is the risk of an individual investment when it is held in ------.
Diversifiable risk is that part of the stand-alone risk that can be eliminated by diversification.- Aisolation
- Btogether
9Stand-alone risk is the risk of an individual investment when it is held in isolation.
Diversifiable risk is that part of the stand-alone risk that can be eliminated by -------- Adiversifcation
- Bquantitative data
10Diversifiable risk is that part of the stand-alone risk that can be eliminated by diversification.
Portfolio risk is that part of the stand-alone risk that cannot be eliminated by diversification- AVerdadero
- BFalso
11what cannot be eliminated by diversification?
- Adeliverable risk
- Bportfolio risk
12It is --- rationale for an investor, whether an individual or business, to hold a single investment.
- Anot
- Bsuper
13It is not rationale for an investor, whether an individual or business, to hold ---------
- Asingle investment
- Bmultiple investment
14It is not rationale for an investor, whether an individual or business, to hold a single investment.
Because an investment held in a portfolio is less risky than when held in isolation,
stand-alone risk measures (i.e., s) are not relevant for investments held in portfolios.
Because an investment held in a -------- is less risky than when held in isolation,- Aportfolio
- Bageneda
15The most widely used measure of risk for investments held in portfolios is the beta coefficient, or just beta.
- AVerdadero
- BFalso
16The most widely used measure of risk
- Abeta
- Bone
17The most widely used measure of risk for investments held in portfolios is the beta coefficient, or just beta.
Beta measures the volatility of the investment’s returns relative to the returns on the portfolio.
Because beta is a relative measure of risk, it depends on both the investment and the portfolio.- Ait depends on both the investment and the portfolio.
- Bit depends on both the investment and the agenda
18If beta = 1.0, investment has average risk, where average is defined as the riskiness of the portfolio.
If beta > 1.0, investment has above-average risk.
If beta < 1.0, investment has below-average risk.
Most investments have betas in the range of 0.5 to 1.5.
=========
If beta < 1.0.........- Ainvestment has average risk
- Binvestment has above-average risk
- Cinvestment has below-average risk
19Most investments have betas in the range of 0.5 to 1.5.
- AVerdadero
- BFalso
20Most investments have betas in the range of ---- to 1.5.
- A0.1
- B0.0
- C0.5
21The CAPM is based on a very restrictive set of assumptions.
It has not been empirically verified.
It is based on investor expectations, but the inputs used in the model typically are based on historical data.- AVerdadero
- BFalso
22The CAPM is based on a very ________ set of assumptions.
It has not been empirically verified.
It is based on investor expectations, but the inputs used in the model typically are based on historical data.- Aunrestrictive
- Brestrictive
23CAPM It is based on investor expectations, but the inputs used in the model typically are based on ---- data.
- Abar
- Bhistorical
24Some Good News About the CAPM
The CAPM provides investors with a very rational way of thinking about required rates of return..
R(Re) is composed of:
The risk-free rate, which compensates investors for the time value of money.
A risk premium, which compensates investors for the amount of portfolio risk assumed.- AVerdadero
- BFalso
25Some Good News About the CAPM
The CAPM provides investors with a very ------ way of thinking about required rates of return..
R(Re) is composed of:
The risk-free rate, which compensates investors for the time value of money.
A risk premium, which compensates investors for the amount of portfolio risk assumed.- Aunrational
- Brational
26The ---------- which compensates investors for the time value of money.
A risk premium, which compensates investors for the amount of portfolio risk assumed.- Anot risk free rate
- Brisk free rate
27Portfolio Risk
If the investor is an individual, the investments are individual securities (stocks), the portfolio is the market portfolio, and the relevant risk of each asset is called market risk.
If the investor is a business, the investments are real assets (projects), the portfolio is the entire business, and the relevant risk of each asset is called corporate risk .- AVerdadero
- BFalso
28Portfolio Risk
If the investor is an individual, the investments are individual --------- (stocks), the portfolio is the market portfolio, and the relevant risk of each asset is called market risk.
If the investor is a business, the investments are real assets (projects), the portfolio is the entire business, and the relevant risk of each asset is called corporate risk .- Anot securities
- Bsecurities
29If the investor is a business, the investments are ------- assests which are known as -------
- Aassests, project
- Bnot assets, not business
30In for-profit businesses, projects have both corporate risk and market risk.
The risk of the project as seen by the business’s managers is corporate risk, which is measured by its corporate beta.
The risk of the project as seen by the business’s shareholders is market risk, which is measured by market beta.- AIn for-profit businesses, projects have both corporate risk and market risk.
- BIn for-profit businesses, projects does have both corporate risk and market risk.
31The risk of the project as seen by the business’s managers is corporate risk, which is measured by its corporate beta.
- Acorporate
- Bincorporate
32what is measured by market beta
- Abusiness shareholders
- Bbusiness managers
33The beta of portfolio is simply the weighted average of the betas of the component investments.
- Abeta of portfolio is simply the weighted average
- Bbeta of portfolio is not simply the weighted average
34Risk and Required Return
Defining and measuring risk is of no value if we cannot relate risk to required rate of return.- AVerdadero
- BFalso
35Risk and Required Return
Defining and measuring risk is of ------ value if we cannot relate risk to required rate of return.- Aa
- Bno
Información
- Descripción
- easy
- Autor
- nkhsemail
- Idioma
- English
- Visitas
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