This quiz works best with JavaScript enabled. Home > Economics > Finance > Risk > Risk And Return – Quiz 4 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Risk And Return Quiz 4 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Companies shares outstanding times its stock price per share A) Market Formula. B) Share Formula. C) Market Capitilization. D) None of above. Show Answer Correct Answer: C) Market Capitilization. 2. Mutual funds can be: A) Purchased in any amount. B) Can be focused on a single asset class. C) Invested by sector. D) All the above. Show Answer Correct Answer: D) All the above. 3. A shift to the right of the Securities Market Line is due to A) Inflationary Expectation. B) Risk aversion. C) Pure expectation theory. D) Risk aggressiveness. Show Answer Correct Answer: A) Inflationary Expectation. 4. What affects the gradient of the slope of Security Market Line (SML)? A) Change in Investors' risk aversion. B) Change in Beta. C) Change in Expected inflation. D) Change in Coefficient of Variation. Show Answer Correct Answer: A) Change in Investors' risk aversion. 5. When saving, the focus is on ..... A) Finding an investment that pays high returns. B) Safety of the original amount. C) Investing for the future. D) Spending. Show Answer Correct Answer: B) Safety of the original amount. 6. A statistical measure of the degree to which two variables (e.g., securities' returns) move together. A) Covariance. B) Variance. C) Coefficient of variation. D) Certainty equivalent. Show Answer Correct Answer: A) Covariance. 7. When investing the focus is on ..... A) High risk. B) Return. C) Low risk. D) Savings. Show Answer Correct Answer: B) Return. 8. Portfolio of investments that is weighted the same as the stock-exchange index A) Portfolio of Stock exchange. B) Investment Fund. C) Index Fund. D) Index Fund of Portfolio Diversification. Show Answer Correct Answer: C) Index Fund. 9. This type of risk is avoidable through proper diversification. A) Portfolio risk. B) Total risk. C) Unsystematic risk. D) Systematic risk. Show Answer Correct Answer: C) Unsystematic risk. 10. Ahmad is considering investing in stocks. Which is the less risky investment? A) Stock C:SD = 8%; E(R) = 12%. B) Stock A:SD = 10%; E(R) = 10%. C) Stock B:SD = 6%; E(R) = 10%. D) Stock D:SD = 20%; E(R) = 24%. Show Answer Correct Answer: C) Stock B:SD = 6%; E(R) = 10%. 11. Portfolio terdiri dari 3 saham sebagai berikut:Saham A expected rate of return 20.5% bobot 20%Saham B expected rate of return 15% bobot 25%Saham C expected rate of return 12% bobot 55%Tentukan expected rate of return dari portfolio! A) 18%. B) 17%. C) 17.7%. D) 17.5%. Show Answer Correct Answer: D) 17.5%. 12. If you have a long-time horizon for investing, you should: A) Lean toward high-risk investments with high-return potential. B) Keep at least 75% cash or money market funds for immediate availability. C) Own only one stock. D) Diversify into savings accounts and U.S. savings bonds. Show Answer Correct Answer: A) Lean toward high-risk investments with high-return potential. 13. If investment ABC has a coefficient of variation equal to 5 while investment XYC has Sharpe Ratio of 6, ABC is more risky A) True. B) False. C) Data is insufficient to determine which is riskier. D) Both have the same riskiness. Show Answer Correct Answer: C) Data is insufficient to determine which is riskier. 14. The fundamental analysis is a method of finding out A) Value of shares. B) Tips. C) Future price of a security. D) Ratio. Show Answer Correct Answer: C) Future price of a security. 15. Geometric mean is always ..... arithmetic mean. A) Lower than. B) Higher than. C) The same as. D) None of above. Show Answer Correct Answer: A) Lower than. 16. Which of the following is most appropriate for measuring a bond's sensitivity to shaping risk? A) Key rate duration. B) Effective duration. C) Modified duration. D) None of above. Show Answer Correct Answer: A) Key rate duration. 17. The "second-order" effect on a bond's percentage price change given a change in yield-to-maturity can be best described as: A) Duration. B) Convexity. C) Yield volatility. D) None of above. Show Answer Correct Answer: B) Convexity. 18. The excess of the average market return from the Short-Term Government Security Rate A) Market risk premium. B) Risk adjusted return. C) Risk free rate. D) Beta. Show Answer Correct Answer: A) Market risk premium. 19. Which one of the following guarantees is offered to common stock investors? A) Guarantee to receive capital gains. B) No guarantees of any form. C) Guarantee only to receive a refund of principal. D) Guarantee to receive dividends. Show Answer Correct Answer: B) No guarantees of any form. 20. Suppose you can invest in 2 assets. Asset A will guarantee you 10% return, while asset B will give you either 5% or 15% with equal probability. You will choose asset A if you are ..... A) Risk-averse. B) Risk-seeking. C) Risk-neutral. D) None of above. Show Answer Correct Answer: A) Risk-averse. 21. Investors can eliminate ..... through diversification. A) Uncertainty. B) Total risk. C) Unsystematic risk only. D) Systematic risk only. Show Answer Correct Answer: C) Unsystematic risk only. 22. Companies with more than $ 10 Billion market value A) Large-Cap Companies. B) Big Stock Companies. C) Parent Corporations. D) Father Companies. Show Answer Correct Answer: A) Large-Cap Companies. 23. Investing is for reaching ..... goals. A) Lofty. B) Short-term. C) Permanent. D) Long-term. Show Answer Correct Answer: D) Long-term. 24. Have a wide variety of investments in a portfolio A) Portfolio Maximization. B) Portfolio Diversification. C) Investment Diversification. D) Portfolio Diversifcation. Show Answer Correct Answer: B) Portfolio Diversification. 25. You bought 100 shares of stock at $ 15 per share. You sold your 100 shares at $ 21.75 per share. Calculate your percentage of gain. A) 38%. B) 45%. C) 21%. D) 16%. Show Answer Correct Answer: B) 45%. 26. If Soraya holds a single asset in his investment portfolio, his risk exposure would be best measured by the ..... A) Coefficient of variation. B) Normal distribution of returns. C) Standard deviation of returns. D) None of the above. Show Answer Correct Answer: C) Standard deviation of returns. 27. Savings Instruments A) Transportation. B) Vehicles for money. C) Vehicles for money that has been set aside for the future. D) High Interest, Low Risk. Show Answer Correct Answer: C) Vehicles for money that has been set aside for the future. 28. Unilever shares have a beta of 0.3. Is Unilever stock risky? A) No, when compared to the stock average. B) Very risky, because of the low beta value. C) No, when compared to riskless assets. D) None of above. Show Answer Correct Answer: A) No, when compared to the stock average. 29. It is known: the historical return of security A is 5%; 8.5% and 10%historical return from the market is 2%; 3% and 4%Beta of security A is ..... and security A ..... A) 0.5; risky. B) 1, 7; not risky. C) 2, 5; risky. D) 2; risky. Show Answer Correct Answer: C) 2, 5; risky. 30. General investment goals of a investor A) Investment Policy Statement. B) Investment Board. C) Investment Policy Paper. D) Investment Statement. Show Answer Correct Answer: A) Investment Policy Statement. ← PreviousNext →Related QuizzesFinance QuizzesEconomics QuizzesRisk And Return Quiz 1Risk And Return Quiz 2Risk And Return Quiz 3Risk And Return Quiz 5 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books