This quiz works best with JavaScript enabled. Home > Finance > Risk > Risk And Return – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Risk And Return Quiz 2 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. In a portfolio, how does one choose between 2 stocks to reduce risk without sacrificing return? A) High Correlation, High Return. B) High Correlation, Low Return. C) Low Correlation, High Return. D) Low Correlation, Low Return. Show Answer Correct Answer: C) Low Correlation, High Return. 2. Companies between $ 2 Billion and $ 10 Billion market capital A) Medium Market Companies. B) Daughter companies. C) Mediocre Markets. D) Mid-cap stocks. Show Answer Correct Answer: D) Mid-cap stocks. 3. Before you begin investing, you need to ..... A) Create your investment plan. B) Understand your tolerance to risk. C) Share your investments ideas with others. D) Research all companies you are interested in. Show Answer Correct Answer: B) Understand your tolerance to risk. 4. Investors can eliminate what type of risk by diversifying? A) Systematic risk. B) Unsystematic risk. C) Beta risk. D) Total risk. Show Answer Correct Answer: B) Unsystematic risk. 5. Exposure to loss or damage A) Loss of Return Percentage. B) Risk Per Investment Percentage. C) Danger. D) Risk. Show Answer Correct Answer: D) Risk. 6. ..... refers to the portion of an asset's risk that attributes to firm's specific random events, for example strikes and robberies, that can be eliminated by diversification. A) Market risk. B) General risk. C) Unique risk. D) Non-diversifiable risk. Show Answer Correct Answer: C) Unique risk. 7. Fremont Enterprises has an expected return of 16% and Laurelhurst News has an expected return of 19%. If you put 48% of your portfolio in Laurelhurst and 52% in Fremont, what is the expected return of your portfolio? A) 17.44%. B) 17.56%. C) 17.32%. D) None of above. Show Answer Correct Answer: A) 17.44%. 8. The critical years for making decisions about education and employment are ..... A) 6-25 years old. B) Earlier the better. C) 17-20 years old. D) 18-25 years old. Show Answer Correct Answer: D) 18-25 years old. 9. If the value of the expected return is higher than the required returns, then the stock: A) Undervalued. B) Fairly valued. C) Overvalued. D) None of above. Show Answer Correct Answer: A) Undervalued. 10. Known:Return from risk free asset is 3%Return from market is 15%Beta portfolio is 0.75Required return from portfolio is ..... A) 8%. B) 10%. C) 12%. D) 14%. Show Answer Correct Answer: C) 12%. 11. Which of the following statements about duration is correct? A bond's: A) Effective duration is a measure of yield duration. B) Modified duration is a measure of curve duration. C) Modified duration cannot be larger than its Macaulay duration. D) None of above. Show Answer Correct Answer: C) Modified duration cannot be larger than its Macaulay duration. 12. Corporate Bonds A) Debt Obligations. B) Bond Obligations. C) Savings Obligation. D) Equity Obligations. Show Answer Correct Answer: A) Debt Obligations. 13. Set of rules to guide to help a investors selection of their portfolio A) Investment Manual. B) Investment Strategy. C) Investment Plan. D) None of above. Show Answer Correct Answer: B) Investment Strategy. 14. What is the value of a $ 1, 000 investment that loses 5% each year for 8 years? A) $ 181.98. B) $ 234.88. C) $ 663.42. D) $ 864.62. Show Answer Correct Answer: C) $ 663.42. 15. One currency is exchanged for another A) Currency market. B) Foreign exchange. C) Currency exchange. D) Foreign Currency Exchange Market. Show Answer Correct Answer: B) Foreign exchange. 16. Diketahui:Return dari risk free asset adalah 2.5%Return dari security A adalah 7.5%Beta security A adalah 1.5Risk premium dan Required return dari security A adalah ..... A) 5%;5%. B) 4%;7%. C) 5%;6.25%. D) 3%;8%. Show Answer Correct Answer: C) 5%;6.25%. 17. A risk that cannot be eliminated even if the investment if fully diversified A) Market Risk. B) Diversifiable Risk. C) Total risk. D) Unsystematic risk. Show Answer Correct Answer: A) Market Risk. 18. You can't have everything you want so you must ..... your wants. A) Prioritize. B) Relinquish. C) Modify. D) Limit. Show Answer Correct Answer: A) Prioritize. 19. If you need money in more than five years you should ..... A) Borrow. B) Save. C) Invest. D) Get a second job. Show Answer Correct Answer: C) Invest. 20. Two stocks with the following criteria:Share A returns three years 25%;30%;10%Share B returns three years-10%;5%;15%The weight for each year is 70\ % and 30%. Determine the correlation coefficient of the two stocks! A) -0.64. B) -0.87. C) 0.5. D) 1. Show Answer Correct Answer: A) -0.64. ← PreviousNext →Related QuizzesFinance QuizzesRisk And Return Quiz 1Risk 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