Question 1 0 / 5 points

22 Aug Question 1 0 / 5 points

Question 1 0 / 5 points

Which of the statements below is true?

Question options:

Investors want to maximize return and maximize risk.

Investors want to maximize return and minimize risk.  (*This is correct)

Investors want to minimize return and maximize risk.

Investors want to minimize return and minimize risk.

Question 2 5 / 5 points

The practice of not putting all of your eggs in one basket is an illustration of:

Question options:

variance.

diversification.

portion control.

expected return.

Question 3 5 / 5 points

The security market line has:

Question options:

a positive slope.

a negative slope.

no slope.

a beta of 1.0.

Question 4 5 / 5 points

Given an expected market return of 12.0%, a beta of 0.75 for Benson Industries, and a risk-free rate of 4%, what is the expected return for Benson Industries?

Question options:

13%

10%

9%

4%

Question 5 5 / 5 points

For most stocks, the correlation coefficient with other stocks is:

Question options:

positive.

negative.

zero.

The distribution of correlation coefficients between stocks is uniform from -1.0 to +1.0.

Question 6 5 / 5 points

Stocks A, B, C, and D have standard deviations, respectively, of 20%, 5%, 10%, and 15%. Which one is the riskiest?

Question options:

Stock A

Stock B

Stock C

Stock D

Question 7 5 / 5 points

Travis bought a share of stock for $31.50 that paid a dividend of $.85 and sold six months later for $27.65. What was his dollar profit or loss and holding period return?

Question options:

-$3.00, -9.52%

-$3.85, -12.22%

-$.85, -2.70%

-$3.85, -9.52%

Question 8 5 / 5 points

__________ may be defined as a measure of uncertainty in a set of potential outcomes for an event in which there is a chance for some loss.

Question options:

Diversification

Risk

Uncertainty

Collaboration

Question 9 5 / 5 points

The __________ is the intercept on the security market line.

Question options:

prime rate

risk-free rate

market rate of return

beta

Question 10 5 / 5 points

Which of the following investments is considered to be default risk-free?

Question options:

Currency options

AAA-rated corporate bonds

Common stock

Treasury bills

Question 11 5 / 5 points

Correlation, a standardized measure of how stocks perform relative to one another in different states of the economy, has a range from:

Question options:

0.0 to +10.0.

0.0 to +1.0.

-1.0 to +1.0.

There is no range; correlation is a calculated number that can take on any value.

Question 12 5 / 5 points

Jarvis bought a share of stock for $15.75 that paid a dividend of $.45 and sold three months later for $18.65. What was his dollar profit or loss and holding period return?

Question options:

$2.90, 18.41%

$3.35, 21.27%

-$2.90, -18.41%

$.45, 2.86%

Question 13 5 / 5 points

Find the variance for a security that has three one-year returns of 5%, 10%, and 15%.

Question options:

10%

16.67%

25%

30%

Question 14 5 / 5 points

Find the variance for a security that has three one-year returns of -5%, 15%, and 20%.