This quiz works best with JavaScript enabled. Home > Finance > Risk > Risk And Return – Quiz 6 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Risk And Return Quiz 6 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. When saving, the focus is on ..... A) Spending. B) Investing for the future. C) Safety of the original amount. D) Finding an investment that pays high returns. Show Answer Correct Answer: C) Safety of the original amount. 2. A statistical measure of the degree to which two variables (e.g., securities' returns) move together. A) Coefficient of variation. B) Variance. C) Covariance. D) Certainty equivalent. Show Answer Correct Answer: C) Covariance. 3. When investing the focus is on ..... A) Return. B) Savings. C) Low risk. D) High risk. Show Answer Correct Answer: A) Return. 4. Portfolio of investments that is weighted the same as the stock-exchange index A) Index Fund of Portfolio Diversification. B) Portfolio of Stock exchange. C) Investment Fund. D) Index Fund. Show Answer Correct Answer: D) Index Fund. 5. This type of risk is avoidable through proper diversification. A) Portfolio risk. B) Systematic risk. C) Unsystematic risk. D) Total risk. Show Answer Correct Answer: C) Unsystematic risk. 6. Ahmad is considering investing in stocks. Which is the less risky investment? A) Stock A:SD = 10%; E(R) = 10%. B) Stock B:SD = 6%; E(R) = 10%. C) Stock C:SD = 8%; E(R) = 12%. D) Stock D:SD = 20%; E(R) = 24%. Show Answer Correct Answer: B) Stock B:SD = 6%; E(R) = 10%. 7. 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) 17.7%. C) 17%. D) 17.5%. Show Answer Correct Answer: D) 17.5%. 8. 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. 9. 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. 10. The fundamental analysis is a method of finding out A) Ratio. B) Value of shares. C) Tips. D) Future price of a security. Show Answer Correct Answer: D) Future price of a security. 11. 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. 12. 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. 13. 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. 14. The excess of the average market return from the Short-Term Government Security Rate A) Risk adjusted return. B) Beta. C) Risk free rate. D) Market risk premium. Show Answer Correct Answer: D) Market risk premium. 15. Municipal Bonds A) Debt with no interest issued by state or local governments. B) Debt with no interest issued by local or national governments. C) Debt with interest issued by state or local governments. D) Debt with low interest issued by state or national governments. Show Answer Correct Answer: C) Debt with interest issued by state or local governments. 16. Which one of the following guarantees is offered to common stock investors? A) Guarantee to receive dividends. B) Guarantee to receive capital gains. C) Guarantee only to receive a refund of principal. D) No guarantees of any form. Show Answer Correct Answer: D) No guarantees of any form. 17. 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. 18. Investors can eliminate ..... through diversification. A) Total risk. B) Unsystematic risk only. C) Systematic risk only. D) Uncertainty. Show Answer Correct Answer: B) Unsystematic risk only. 19. Companies with more than $ 10 Billion market value A) Father Companies. B) Large-Cap Companies. C) Big Stock Companies. D) Parent Corporations. Show Answer Correct Answer: B) Large-Cap Companies. 20. Investing is for reaching ..... goals. A) Lofty. B) Permanent. C) Short-term. D) Long-term. Show Answer Correct Answer: D) Long-term. ← PreviousNext →Related QuizzesFinance QuizzesRisk And Return Quiz 1Risk And Return Quiz 2Risk And Return Quiz 3Risk And Return Quiz 4Risk And Return Quiz 5Risk And Return Quiz 7 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books