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Question;Question 1. Question;Maximum international diversification can be achieved by;investing solely in U.S. multinational corporations.;True;False;Points Received: 1 of 1;Comments;Question 2. Question;Traditional portfolio management;IN 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.;Points Received: 0 of 1;Comments;Question 3. Question;Which one of the following conditions can be effectively;eliminated through portfolio diversification?;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;Points Received: 1 of 1;Comments;Question 4. Question;Diversifiable risk is also called systematic risk.;True;False;Points Received: 1 of 1;Comments;Question 5. Question;Currency exchange rate risk can be hedged using forwards;futures and options.;True;False;Points Received: 1 of 1;Comments;Question 6. Question;Portfolio objectives should be established before beginning;to invest.;True;False;Points Received: 1 of 1;Comments;Question 7. Question;A stock with a beta of 1.3 is less risky than a stock with a;beta of 0.42.;True;False;Points Received: 1 of 1;Comments;Question 8. Question;A beta of 0.5 means that a stock is 5% more risky than the;overall market.;True;False;Points Received: 1 of 1;Comments;Question 9. Question;Perfectly negatively correlated assets have a correlation;coefficient of plus one.;True;False;Points Received: 1 of 1;Comments;Question 10. Question;A portfolio with a beta of.5 will be 50% more volatile than;the market portfolio.;IN True;False;Points Received: 0 of 1;Comments;Question 11. Question;The Dow Jones Industrial Average of thirty stocks is a;suitable proxy for market returns in the CAPM.;IN True;False;Points Received: 0 of 1;Comments;Question 12. Question;Standard deviation is a measure that indicates how the price;of an individual security responds to market forces.;True;False;Points Received: 1 of 1;Comments;Question 13. Question;Aggressive investors tend to prefer investing solely in;negative beta stocks in a bull market.;True;False;Points Received: 1 of 1;Comments;Question 14. Question;Both the efficient frontier and beta are important aspects;of MPT.;True;False;Points Received: 1 of 1;Comments;Question 15. Question;Correlation is a measure of the relationship between two;series of numbers.;True;IN False;Points Received: 0 of 1;Comments;Question 16. Question;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.;True;False;Points Received: 1 of 1;Comments;Question 17. Question;Systematic risks;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.;Points Received: 1 of 1;Comments;Question 18. Question;Historical betas are always reliable predictors of future;return fluctuations.;True;False;Points Received: 1 of 1;Comments;Question 19. Question;Beta measures diversifiable risk while standard deviation;measures systematic risk.;True;False;Points Received: 0 of 1;Comments;Question 20. Question;Betas must be positive numbers.;True;False;Points Received: 1 of 1;Comments;Question 21. Question;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;+1.5.;+1.0.;-1.0.;-0.5.;Points Received: 0 of 1;Comments;Question 22. Question;Arbitrage pricing theory suggests that there are a number of;factors that affect the risk premium of a security.;True;False;Points Received: 1 of 1;Comments;* Times are displayed;in (GMT-10:00) Hawaii


Paper#45864 | Written in 18-Jul-2015

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