**FIN 351 DeVry Week 7 Quiz Latest**

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**FIN 351 DeVry Week 7 Quiz Latest**

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**FIN 351 DeVry Week 7 Quiz Latest**

**FIN 351 DeVry Week 7 Quiz Latest**

**Question 1. Question : (TCO 7)** According to the text, a risk-averse investor _____.

- demands a premium for assuming risk
- will only participate in low-risk or risk-free investments
- is one of a small minority in the United States
- More than one of the above

**Question 2. Question : (TCO 7)** Under Markowitz’s theory, the ideal portfolio for an investor is represented by _____.

- the point of tangency between the efficient frontier and the investor’s indifference curve
- the highest possible indifference curve
- the highest possible point on the efficient frontier
- None of the above

**Question 3. Question : (TCO 7)** Systematic risk is rewarded with a premium in the marketplace because _____.

- risk is particular to the stock or industry
- it represents a random occurrence which could not have been foreseen
- it is associated with market movements that cannot be eliminated through diversification
- None of the above

**Question 4. Question : (TCO 7)** Which of the following are assumptions of the capital asset pricing model?

- Funds can be borrowed or lent in unlimited quantities at a risk-free rate.
- The objective of all investors is to maximize their expected utility over the same one-period timeframe, using the same basis for evaluating investments.
- There are no taxes or transaction costs associated with any investment.
- All of the above

**Question 5. Question : (TCO 7) **A good way to minimize risk and receive an optimum return on your portfolio is _____.

- through diversification
- to buy only risk-free securities
- through blue-chip stock purchases only
- through junk-bonds

**Question 6. Question : (TCO 7)** Assume a portfolio has the possibility of returning 3%, 6%, 11%, or 16%, with the likelihood of 20%, 30%, 25%, and 25%, respectively. The expected value of the portfolio is _____.

- 8.75%
- 9.0%
- 9.15%
- 9.51%

**Question 7. Question : (TCO 7)** If the market rate of return is 10% and the beta on a particular stock is 1.00, the return on the stock will be _____.

- greater than 10%
- 10%
- less than 10%
- dependent on some other factor

**Question 8. Question : (TCO 7)** For two investments with a correlation coefficient (rij) greater than +1, the portfolio standard deviation will be _____ the weighted average of the individual investments’ standard deviation.

- more than
- less than
- equal to
- zero compared to

**Question 9. Question : (TCO 7) **The capital asset pricing model (CAPM) takes off where the _____ concluded.

- market line
- capital market line
- efficient frontier and Markowitz portfolio theory
- arbitrage pricing theory

**Question 10. Question : (TCO 7)** Using the formula for the security market line (Formula 21-7), if the risk-free rate (RF) is 6%, the market rate of return (KM) is 12%, and the beta (bi) is 1.2, compute the anticipated return for stock i (Ki).

- 20.4%
- 16.33%
- 13.64%
- 13.2%