1. A common approach of estimating the variability of returns involving forecast

Question

1. A common approach of estimating the variability of returns involving forecasting the pessimistic, most likely, and optimistic returns associated with the asset is called

Select one:

a. marginal analysis

b. financial statement analysis

c. sensitivity-analysis

d. break-even analysis

2. Perfectly _________________ correlated series move exactly together and have a correlation coefficient of ____________, while perfectly __________ correlated series move exactly in opposite directions and have a correlation coefficient of __________________.

Select one:

a. negatively; +1; positively; -1

b. negatively; -1; positively; +1

c. positively; +1; negatively; -1

d. positively; -1; negatively;+-1

3. If you expect the market to increase which of the following portfolios should you purchase?

Select one:

a. a portfolio with a beta of 1.9

b. a portfolio with a beta of -0.5

c. a portfolio with a beta of 0.0

d. a portfolio with a beta of 1.

4. Risk that affects all firms is called

Select one:

a. diversifiable risk.

b. nondiversifiable risk.

c. management risk.

d. total risk.

Explanation / Answer

1.(c)

2.(c)

3.(b)

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