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Chaminade MBA754 quiz 5




Question 1.1.Maximum international diversification can be achieved by investing solely in U.S. multinational corporations. (Points: 1);True;False;Question 2.2.Traditional portfolio management (Points: 1);concentrates on only the most recent "hot" sectors of the market.;typically centers on interindustry diversification.;includes only diversified bonds in a laddered portfolio.;is based on statistical measures to develop the portfolio plan.;Question 3.3.Which one of the following conditions can be effectively eliminated through portfolio diversification? (Points: 1);a general price increase nationwide;an interest rate reduction by the Federal Reserve;increased government regulation of auto emissions;change in the political party that controls Congress;Question 4.4.Diversifiable risk is also called systematic risk. (Points: 1);True;False;Question 5.5.Currency exchange rate risk can be hedged using forwards, futures and options. (Points: 1);True;False;Question 6.6.Portfolio objectives should be established before beginning to invest. (Points: 1);True;False;Question 7.7.A stock with a beta of 1.3 is less risky than a stock with a beta of 0.42. (Points: 1);True;False;Question 8.8.A beta of 0.5 means that a stock is 5% more risky than the overall market. (Points: 1);True;False;Question 9.9.Perfectly negatively correlated assets have a correlation coefficient of plus one. (Points: 1);True;False;Question 10.10.A portfolio with a beta of.5 will be 50% more volatile than the market portfolio. (Points: 1);True;False;Question 11.11.The Dow Jones Industrial Average of thirty stocks is a suitable proxy for market returns in the CAPM. (Points: 1);True;False;Question 12.12.Standard deviation is a measure that indicates how the price of an individual security responds to market forces. (Points: 1);True;False;Question 13.13.Aggressive investors tend to prefer investing solely in negative beta stocks in a bull market. (Points: 1);True;False;Question 14.14.Both the efficient frontier and beta are important aspects of MPT. (Points: 1);True;False;Question 15.15.Correlation is a measure of the relationship between two series of numbers. (Points: 1);True;False;Question 16.16.A coefficient of determination of 0.6 means that 40% of the variation in a security's return is related to factors other than the security's relationship to the market. (Points: 1);True;False;Question 17.17.Systematic risks (Points: 1);can be eliminated by investing in a variety of economic sectors.;are forces that affect all investment categories.;result from random firm-specific events.;are unique to certain investment vehicles.;Question 18.18.Historical betas are always reliable predictors of future return fluctuations. (Points: 1);True;False;Question 19.19.Beta measures diversifiable risk while standard deviation measures systematic risk. (Points: 1);True;False;Question 20.20.Betas must be positive numbers. (Points: 1);True;False;Question 21.21.The best stock to own when the stock market is at a peak and is expected to decline in value is one with a beta of (Points: 1);+1.5.;+1.0.;-1.0.;-0.5.;Question 22.22.Arbitrage pricing theory suggests that there are a number of factors that affect the risk premium of a security. (Points: 1);True;False


Paper#20308 | Written in 18-Jul-2015

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