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

FIN351

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%