This quiz works best with JavaScript enabled. Home > Finance > Risk > Risk And Return – Quiz 5 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Risk And Return Quiz 5 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The wider the dispersion of returns on a stock, the: A) Lower the expected rate of return. B) Higher the standard deviation. C) Lower the real rate of return. D) Lower the variance. Show Answer Correct Answer: B) Higher the standard deviation. 2. Which of the following is an example of systematic risk? A) BHP Billiton posts lower than expected earnings. B) Woolworths announces record earnings. C) The government raises interest rates unexpectedly. D) Coca-Cola announces higher than expected earnings. Show Answer Correct Answer: C) The government raises interest rates unexpectedly. 3. The risk premium value of a portfolio describes ..... A) The asset is risky. B) These assets are of interest to many investors. C) Asset liquidity. D) Compensation that investors want from the risks they face. Show Answer Correct Answer: D) Compensation that investors want from the risks they face. 4. Equity Funds A) Funds that invest in specific bonds. B) Funds that a company gives to investors. C) Funds that invest in equities. D) Bonds that give investors equity with interest latery. Show Answer Correct Answer: C) Funds that invest in equities. 5. Savings Bonds A) Transferable treasury securities. B) Nontransferable money market bond securities. C) Transferable treasury accounts. D) Nontransferable treasury securities. Show Answer Correct Answer: D) Nontransferable treasury securities. 6. Think carefully about this one. Some investors will accept high risk investments and some investors prefer low risk investments. What term best describes that situation? A) Risk aversion. B) Risk-return tradeoff. C) Risk Tolerance. D) Rate of return. Show Answer Correct Answer: C) Risk Tolerance. 7. The risk-free security has a beta equal to ....., while the market portfolio's beta is equal to ..... A) One; more than one. B) One; less than one. C) Zero; one. D) Less than zero; more than zero. Show Answer Correct Answer: C) Zero; one. 8. Which one of the following is an example of unsystematic risk? A) Decrease in the national level of inflation. B) Adoption of a national sales tax. C) An increased feeling of global prosperity. D) National decrease in consumer spending on entertainment. Show Answer Correct Answer: D) National decrease in consumer spending on entertainment. 9. If employees of a company go on strike, this is an example of which types of investment risk? A) Company risk. B) Industry risk. C) Political risk. D) Inflation risk. Show Answer Correct Answer: A) Company risk. 10. Income or profit from a investment A) Return. B) Cash back. C) Returnage rate. D) Profit. Show Answer Correct Answer: A) Return. 11. Below are all types of return except: A) Actual return. B) Expected return. C) Possible return. D) Required return. Show Answer Correct Answer: C) Possible return. 12. Investing in a global stock fund is a good idea to: A) Focus all risk on the U.S. economy. B) Keep your portfolio dependent solely on the U.S. dollar. C) Diversify into municipal and corporate bonds. D) Diversify holdings to spread risk outside the U.S. economy. Show Answer Correct Answer: D) Diversify holdings to spread risk outside the U.S. economy. 13. The value that describes the stock risk if a number of shares are held as a diversified portfolio is: A) Coefficient correlation. B) Coefficient of variation. C) Beta. D) Standard deviation. Show Answer Correct Answer: C) Beta. 14. The Dow Jones Industrial Average is a collection of: A) Thirty U.S. stocks. B) Thirty municipal bonds. C) Thirty globally diverse stocks. D) None of above. Show Answer Correct Answer: A) Thirty U.S. stocks. 15. Money Market Accounts A) A account that increases the interest rate by a fixed amount ever 2 yrs. B) A deposit account. C) A depos account. D) A checking account. Show Answer Correct Answer: B) A deposit account. 16. A stock has a beta of 1.17 and an expected return of 11.21 percent. If the risk-free rate is 3.2 percent, what is the stock's reward-to-risk ratio? A) 8.21%. B) 9.58%. C) 6.85%. D) 6.32%. Show Answer Correct Answer: C) 6.85%. 17. 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. 18. 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. 19. A shift to the right of the Securities Market Line is due to A) Risk aversion. B) Inflationary Expectation. C) Risk aggressiveness. D) Pure expectation theory. Show Answer Correct Answer: B) Inflationary Expectation. 20. What affects the gradient of the slope of Security Market Line (SML)? A) Change in Expected inflation. B) Change in Beta. C) Change in Investors' risk aversion. D) Change in Coefficient of Variation. Show Answer Correct Answer: C) Change in Investors' risk aversion. ← PreviousNext →Related QuizzesFinance QuizzesRisk And Return Quiz 1Risk And Return Quiz 2Risk And Return Quiz 3Risk And Return Quiz 4Risk And Return Quiz 6Risk And Return Quiz 7 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books