Fin Exam #5(ch 9&10) – Flashcards

Which of these includes any capital gains or losses that a group as well as any income that you received from a specific investment? A. Average return B. Dollar return C. Market return D. Portfolio

To find the percentage return of an investment: A. Multiply the dollar return by the investment value at the beginning of the period B. Divide the dollar return by the investment value at the beginning of the period C. Multiply the dollar return by the investment value at the end of the period D. Divide the dollar return by The investment value at the end of the period

Which of these is the dollar return characterized as a percentage of money invested? A. Average return B. Dollar return C. Market return D. Percentage return

Which of these is a major summarizing the overall performance of the investment? A. Average return B. Dollar return C. Market return D. Percentage return

Which of the following is defined as the volatility of the investment which includes firm specific risk as well as market? A. Diversifiable risk B. market risk C. Standard deviation D. Total risk

Which statement is true? A. The larger the standard deviation the lower the total risk B. The larger the standard deviation the higher the total risk C. The larger the standards aviation the more portfolio risk D. The standard deviation is not an indication of the total risk

Which of the following is the current ranking from least risky to most risky? A. Long term treasury bonds, stocks, treasury bills B. Treasury bills, long-term treasury bonds, stocks C. Stocks, long-term treasury bond, treasury bills D. Stocks, treasury bills, long-term treasury bonds

Which of these is a measure of risk to reward earned by an investment over a specific period of time? A. Coefficient of variation B. Market deviation C. Standard deviation D. Total variation

Which of the following is an index that tracks 500 companies which allows for a great deal of diversification? A. Nasdaq B. Fortune 500 C. S&P 500 D. Wall street journal

Which of these is defined as a combination of investment assets held by an investor? A. Bundle B. Market basket C. Portfolio D. All of these

Which of the following is defined as the portion of total risk that is attributable to firm or industry sectors and can be reduced through diversification? A. Firm specific risk B. Market risk C. Modern portfolio risk D. Total risk

Which of these is the portion of total riks that is attributable to overall economic factors? diversification? A. Firm specific risk B. Market risk C. Modern portfolio risk D. Total risk

Which of the following is another term for market risk? diversification? A. Firm specific risk B.Modern portfolio risk C. Nondiversifiable risk D. Total risk

Which of the following is the concept and procedure for combining securities into portfolio to minimize Risk? A. From specific theory B. Modern portfolio theory C. Optimal Portfolio theory D. Total portfolio theory

Which of these is the investors combination of securities that achieves the highest expected return for a given risk level? A. Efficient portfolio B. Modern portfolio C. Optimal portfolio D. Total portfolio

Which of these is the term for portfolios with the highest return possible for each risk level? A. Efficient portfolio B. Modern portfolio C. Optimal portfolio D. Total portfolio

Which of the following statements is correct? A. A single stock has a lot of diversifiable risk B. A single stock has more market risk than a diversified portfolio of stocks C. Bonds and stocks Have a high correlation because they're both financial assets D. None is correct

That the deliveries of the S and P 500 index is equal to Colon: A. Diversifiable risk B. Nondiversifiable risk C. Modern portfolio risk D. Efficient frontier risk

Which of the following is a true statement? A. The risk and return that the firm experienced in the past is also the risk level for its future B. Firms can quiet possibly change their stocks' risk level by subtentially changing their business C. If a firm takes on riskier new projects over time the firm itself will become less risky D. If a firm takes less risky projects overtime the firm itself will become more risky

Which of the following is the average of possible returns weghted by the likelihood of those returns occurring? A. Efficient return B. Expected return C. Market return D. Required return

Which of the following is typically considered on uS government bonds and bills and equals the real interest plus the expected inflation premium? A. Required return B. Risk free rate C. Risk Premium D. Market risk premium

Which of the following is the reward investors require for taking risk? A. Required return B. Risk-free rate C. Risk premium D. Market risk premium

Which of these is the any reward for taking systematic stock market risk? A. Required return B. Risk-free rate C. Risk premium D. Market risk premium

Which of the following is the asset pricing Thoery based on a beta, a measure of market risk? A. Behavioral asset pricing model B. Capital asset pricing model C. Efficient market asset pricing model D. Efficient market hypothesis

In theory which of these is a combination of securities that place the portfolio on the efficient frontier and on a line tangent from the risk-free rate? A. Efficient market B. Market portfolio C. Probability distribution D. Stock market bubble

Which of the following is the use of debt to increase an investment position? A. Behavioral finance B. Financial leverage C. Probability D. Stockmarket bubble

Which of these is the line on the graph of return and risk standard deviation from the risk free rate through through the market portfolio? A. Caplital asset pricing line B. Capital Market line C. Efficient market line D. Efficient market hypothesis

Which of these is a measure of the sensitivity of a stock or portfolio to market risk? A behavioral finance B. Beta C. Efficient market D. Hedge

Which of these is similar to the capital market line except that risk is characterized by beta instead of standard deviation? A. Market risk line B. Probability market line C. Security market line D. Stock market line

Which of these is the measurement of risk for a collection of stocks for an investor? A. Beta B. Efficient market C. Expected return D. Portfolio beta

Which of these is a theory that describes the types of information that are reflected in current stock prices? A. Asset pricing B. Behavioral finance C. Efficient market hypothesis D. Public information

Which of the following is data that includes past stock prices and volume, financial statements, corporate news, analyst opinions? A. Audited financial statements B. Generallt Accepted accounting principles C. Privately held information D. Public information

Investor enthusiasm causes an inflated bull market that drives prices too high, ending in dramatic collapse in prices is known as: A. Behavioral finance B. Efficient Market C. Privately held information D. Stockmarket bubble

Special rights given to employees to buy a specific number of shares of the company stock at a fixed-price during a specific period of time is known as: A. Executive stock Options B. Privately held information C. Restricted Stock D. Stock market bubble

Which of the following is most correct? A. In an efficient market investors will buy overvalued stock which will drive its price down B. In an efficient market investors will sell undervalued stock which will drive it's priced down C. In an efficient market, investors will sell overvalued stock which will drive its price down D. None is correct

All of the following are necessary conditions for an efficient market except: A. Low trading or transaction cost B. Many buyers and sellers C. Free and available information to market participants D. Low stock prices

The process of the cognitive processes and biases associated with making financial and economic decisions is known as: A. Efficient thinking hypothesis B. Financial cognition C. Financial leverage D. Behavioral finance