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##### While a bond investor may focus primarily on coupo...

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While a bond investor may focus primarily on coupon interest received, the total return on a bond held to maturity may also depend on: A. changes in interest rates. B. capital gain or loss. C. adjustments to par value. D. dividend payments. Reset Selection Mark for Review What's This? Question 2 of 21 5.0 Points While all securities are exposed to market risk to a certain extent, it primarily affects: A. common stocks. B. corporate bonds. C. Treasury securities. D. international investments. Reset Selection Mark for Review What's This? Question 3 of 21 5.0 Points Assume you just purchased a bond for $950. The bond has a face value of $1,000, matures in one year, and has a 5 percent coupon. Your total return on this investment at maturity, assuming no default on payments, will be: A. 5.0%. B. 9.3%. C. 10.5%. D. 12.2%. Reset Selection Mark for Review What's This? Question 4 of 21 5.0 Points It is necessary to calculate a return relative for an investment when the investor desires to take the further step of determining a/an: A. inflation adjusted return. B. arithmetic mean. C. cumulative wealth index. D. discounted cash flow. Reset Selection Mark for Review What's This? Question 5 of 21 5.0 Points A U.S. investor who chooses to buy stock of a foreign company denominated in the local currency is in effect: A. reducing exchange rate risk. B. hedging a portfolio. C. buying dollars. D. selling dollars. Reset Selection Mark for Review What's This? Question 6 of 21 0.0 Points Skip this question. (Maximum number of characters: 60000) Show/Hide Rich-Text Editor Mark for Review What's This? Question 7 of 21 5.0 Points Calculate the arithmetic mean given the following total return values. 0%, 8.3%, 12.6%, -5.2%, and 2.9% A. 3.61% B. 4.35% C. 4.52% D. 5.23% Reset Selection Mark for Review What's This? Question 8 of 21 5.0 Points The value of a geometric mean return calculation, compared to an arithmetic mean, is that it computes: A. compound cumulative returns. B. returns over several years. C. inflation adjusted returns. D. better average single period returns. Reset Selection Mark for Review What's This? Question 9 of 21 5.0 Points To determine real returns on a portfolio, as compared to nominal returns, investors typically take __________ into consideration. A. purchasing power parity B. household income C. the consumer price index D. currency valuations Reset Selection Mark for Review What's This? Question 10 of 21 5.0 Points A standard deviation is commonly employed to understand risk of investments. This arithmetic tool is particularly useful because it measures: A. dispersion. B. weighting. C. mean values. D. concentricity. Reset Selection Mark for Review What's This? Question 11 of 21 5.0 Points The equity risk premium is an important concept in finance, but is often misunderstood. An important source of controversy in this regard is the difference between __________ and __________ risk premiums. A. historical; expected B. realized; guaranteed C. calculated; estimated D. variable; fixed Reset Selection Mark for Review What's This? Question 12 of 21 5.0 Points When an investor looks at a cumulative wealth index, the value change over time is substantially influenced by the effects of: A. indexing. B. inflating. C. discounting. D. compounding. Reset Selection Mark for Review What's This? Question 13 of 21 5.0 Points Mary is evaluating the risk (return deviation) of a model stock portfolio she has constructed. She knows that an ex ante set of returns is a more useful approach. However, she first decides to examine ex post returns because she knows that for a well-diversified portfolio, they are likely to be: A. within one standard deviation. B. reasonably steady across time. C. cumulatively accurate. D. more indicative of future results. Reset Selection Mark for Review What's This? Question 14 of 21 5.0 Points Regardless of the number of assets held in a portfolio or the proportion of total funds placed in each asset, the expected return on the portfolio is always a/an __________ of the expected returns for the individual assets in the portfolio. A. arithmetic mean B. geometric mean C. weighted average D. combined aggregate Reset Selection Mark for Review What's This? Question 15 of 21 5.0 Points Modern Portfolio Theory is similar to principles used in the insurance business, in that its risk reduction properties are founded on the: A. rule of diminishing returns. B. theory of increasing utility. C. law of large numbers. D. principles of cause and effect. Reset Selection Mark for Review What's This? Question 16 of 21 5.0 Points A central tenet of portfolio theory is that diversification can greatly reduce a portfolio's __________ risk. A. systematic B. company specific C. interest rate D. market Reset Selection Mark for Review What's This? Question 17 of 21 5.0 Points Which of the following is a value that can never be a valid correlation coefficient? A. -0.8 B. 0.0 C. 1.0 D. 1.4 Reset Selection Mark for Review What's This? Question 18 of 21 5.0 Points In a portfolio containing two stocks with perfect inverse correlations, the standard deviation of returns will always be: A. zero. B. small. C. large. D. uncertain. Reset Selection Mark for Review What's This? Question 19 of 21 5.0 Points In the case of a portfolio with two securities, the factors that determine total portfolio risk are the variance of each security, the covariance between the securities, and the __________ for each security. A. standard deviation B. dispersion C. geometric mean D. portfolio weights Reset Selection Mark for Review What's This? Question 20 of 21 5.0 Points Jane is an individual investor. She has recently completed an investment strategy utilizing Markowitz portfolio strategy. From this information an observer would most likely conclude that Jane's portfolio is: A. comprised mostly of high return stocks. B. well diversified. C. expected to outperform the market. D. spread across many industry groups. Reset Selection Mark for Review What's This? Question 21 of 21 5.0 Points A central feature of indifference curves is that their shape: A. will vary based on risk preferences. B. always represents an obtainable risk/return profile. C. can occasionally be downward sloping. D. explains return expectations for the overall market.

Paper#6895 | Written in 18-Jul-2015

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