This quiz works best with JavaScript enabled. Home > Finance > Risk > Risk And Return – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Risk And Return Quiz 1 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Plunging oil prices is an example of which of the following types of investment risk? A) Company risk. B) Industry risk. C) Political risk. D) Inflation risk. Show Answer Correct Answer: B) Industry risk. 2. A stock has an expected return of 13.24 percent, the risk-free rate is 4.4 percent, and the market risk premium is 8.98 percent. What is the stock's beta? A) 1.03. B) 1.09. C) .98. D) 0.87. Show Answer Correct Answer: C) .98. 3. Portfolio of two stocks with the following criteria:Share A, Beta 1.7, weight 37%Share B, Beta 1.2, weight 63%Beta portfolio is ..... A) 0, 45. B) 0, 71. C) 1, 39. D) 1, 81. Show Answer Correct Answer: C) 1, 39. 4. Tighter the probability distributions A) The higher the standard deviation. B) The higher the risk. C) The lesser the risk. D) Data is insufficient to determine the riskiness. Show Answer Correct Answer: C) The lesser the risk. 5. What does Stand alone risk consist of? A) Diversifiable risk. B) Market risk. C) All of the above. D) None of above. Show Answer Correct Answer: C) All of the above. 6. If you created a graph with investment risk on the x-axis and investment return on the y-axis and plotted points for two different investments, a line going through the points would probably be: A) Positively sloped. B) Negatively sloped. C) Have a slope of zero. D) None of above. Show Answer Correct Answer: A) Positively sloped. 7. Starting an investment portfolio at a young age means: A) Knowing your investment is always safe. B) You can spend freely, without concern for your financial future. C) There is greater potential for high yield over a longer period. D) You should choose stock with low risks. Show Answer Correct Answer: C) There is greater potential for high yield over a longer period. 8. ..... function of security analysis is concerned with collecting, analysing, interpreting and presenting important facts related to a security A) Selective function. B) Descriptive function. C) Critical function. D) None of the above. Show Answer Correct Answer: B) Descriptive function. 9. Portfolio of two stocks with the following criteria:Share A, Beta 0.15, weight 50%Share B, Beta 1.93, weight 50%Beta portfolio is ..... A) 1.57. B) 1.04. C) 0.91. D) 0.85. Show Answer Correct Answer: B) 1.04. 10. The uncertainty caused by the variability of a company's cash flows is called: A) Financial risk. B) Business risk. C) Financial leverage. D) Agency cost. Show Answer Correct Answer: B) Business risk. 11. Probability = 15%; Return =-5%Probability = 20%; Return = 10%Probability = 30%; Return = 15%Probability = 35%; Return = 25%What is the expected rate of return on the investment? A) 15.4%. B) 14.5%. C) 15.5%. D) 16%. Show Answer Correct Answer: B) 14.5%. 12. Concept that nothing is free A) Importunity Cost. B) Risk. C) Investment Chance. D) Opportunity Cost. Show Answer Correct Answer: D) Opportunity Cost. 13. Companies with less than $ 2 Billion Market Capital A) Baby Companies. B) Small Time Companies. C) Small-cap companies. D) None of above. Show Answer Correct Answer: C) Small-cap companies. 14. The largest component of returns for a 7-year zero-coupon bond yielding 8% and held to maturity is: A) Capital gains. B) Interest income. C) Reinvestment income. D) None of above. Show Answer Correct Answer: B) Interest income. 15. Which of the following three bonds (similar except for yield and maturity) has the least Macaulay duration? A bond with: A) 5% yield and 10-year maturity. B) 5% yield and 20-year maturity. C) 6% yield and 1 0-year maturity. D) None of above. Show Answer Correct Answer: C) 6% yield and 1 0-year maturity. 16. Which of these are included in the calculation of expected return? A) Covariance. B) Correlation. C) Weightage. D) Volatility. Show Answer Correct Answer: C) Weightage. 17. Certificate of Deposit A) Non insured deposit. B) A time deposit of money that varies in interest. C) A time deposit with a fixed interest rate. D) Achievement of having 2 bank accounts. Show Answer Correct Answer: C) A time deposit with a fixed interest rate. 18. Stock A) Shares that give holders ownership interest. B) Holders that give shares ownership interest. C) Shares that give holders rights to the running of the business. D) Shares that give holders right to the land. Show Answer Correct Answer: A) Shares that give holders ownership interest. 19. Which of the following scenarios shows a perfectly negative correlation on stocks A) ABC stocks moves slightly on the same direction as XYZ. B) ABC stocks moves completely opposite of XYZ. C) XYZ moves completely the same as ABC. D) ABC moves perfectly along with XYZ. Show Answer Correct Answer: B) ABC stocks moves completely opposite of XYZ. 20. A minimum-variance portfolio formed by investing in only stocks must be ..... A) Risker than risk-free asset. B) Less risky than risk-free asset. C) As risky as the risk-free asset. D) None of above. Show Answer Correct Answer: A) Risker than risk-free asset. Next →Related QuizzesFinance QuizzesRisk And Return Quiz 2Risk And Return Quiz 3Risk And Return Quiz 4Risk And Return Quiz 5Risk And Return Quiz 6Risk And Return Quiz 7 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books