Question 1 If the dispersion around a security\'s return is larger Answer the ex
ID: 2698999 • Letter: Q
Question
Question 1
If the dispersion around a security's return is larger
Answer
the expected return is smaller
the standard deviation is smaller
the stock's price is higher
the security's risk is higher
1 points
Question 2
The future value of a dollar
1. increases with higher interest rates
2. decreases with higher interest rates
3. increases as the time period increases
4. decreases as the time period increases
Answer
1 and 3
1 and 4
2 and 3
2 and 4
1 points
Question 3
The security market line does not
Answer
indicate the relationship between risk and return
relate the market return and beta to a stock's return
identify the optimal portfolio for the investor
use beta coefficients as a measure of risk
1 points
Question 4
Exchange rate risk refers to fluctuations in
Answer
the prices of stocks on the New York Stock Exchange
the values of bonds and other debt instruments
the price of one currency relative to other currencies
the value of the investor's portfolio
1 points
Question 5
The future value of an annuity will be larger if
1. the annuity is an ordinary annuity
2. the annuity is an annuity due
3. the payments are made at the beginning of the year
4. the payments are made at the end of the year
Answer
1 and 3
1 and 4
2 and 3
2 and 4
1 points
Question 6
Reinvestment rate risk refers to fluctuations in
Answer
a stock's price
a stock's dividend
rates earned when funds are reinvested
the cost of an investment
1 points
Question 7
Unsystematic risk is
Answer
the risk associated with movements in stock prices
reduced through diversification
higher when interest rates rise
the risk of loss of purchasing power
1 points
Question 8
Time value concepts may not be used to determine
Answer
the present value of an annuity
the margin required on a stock purchase
the future value of $100 deposited in a bank
the present value of a lump sum
1 points
Question 9
Diversification reduces
Answer
systematic risk
unsystematic risk
market risk
purchasing power risk
1 points
Question 10
According to the arbitrage pricing theory, the return on a stock
Answer
is not related to the expected return on the stock
depends on the stock's responsiveness to unexpected changes
is reduced through the construction of diversified portfolios
equals the market return if the expected rate of inflation is realized
1 points
Question 11
The efficient frontier in portfolio theory
Answer
indicates the highest return for a given risk
illustrates the optimal trade off between long and short-term capital gains
quantifies systematic and unsystematic risk
identifies the optimal portfolio for the investor
1 points
Question 12
Time value concepts may be used to determine
1. the annual growth rate in dividends
2. the amount in an IRA account after ten years
3. the tax owed on a capital gain
Answer
1 and 2
1 and 3
2 and 3
only 2
1 points
Question 13
The expected return on an investment in stock is
Answer
the expected dividend payments
the anticipated capital gains
the sum of expected dividends and capital gains
less than the realized return
1 points
Question 14
An annuity is a series of
Answer
rising annual payments
random payments
equal payments
unequal payments
1 points
Question 15
Unsystematic risk
Answer
is increased through diversification
is reduced when markets fluctuate less
is affected by the nature of how a firm finances its operations
increases during periods of volatile interest rates
1 points
Question 16
Beta coefficients of 1.3 indicate
Answer
the stock has more unsystematic risk
the stock has less unsystematic risk
the stock is more volatile than the market
the stock is less volatile than the market
1 points
Question 17
Discounting
Answer
expresses the present in the future
brings the future back to the present
is synonymous with compounding
depends on the rate of interest
1 points
Question 18
The future value of an annuity is
1. larger the higher the rate of interest
2. smaller the higher the rate of interest
3. larger the greater the number of years
4. smaller the greater the number of years
Answer
1 and 3
1 and 4
2 and 3
2 and 4
1 points
Question 19
An efficient portfolio
1. maximizes risk for a given return
2. minimizes risk for a given return
3. maximizes return for a given level of risk
4. minimizes return for a given level of risk
Answer
1 and 3
1 and 4
2 and 3
2 and 4
1 points
Question 20
For diversification to reduce risk,
Answer
the returns on the individual securities should be highly correlated
the prices of the stocks should be stable
the returns on the individual securities should be negatively correlated
one firm should offer dividends and the other should offer capital gains
1 points
Question 21
Which is the smallest if interest rates are 8 percent?
Answer
$100 to be received after five years
the present value of an annuity of $100 for 5 years
$100 received in the present
$100 received for two years
1 points
Question 22
Portfolio risk encompasses
1. a firm's financing decisions
2. interest rate risk
3. loss of purchasing power
Answer
1 and 2
1 and 3
2 and 3
all of these choices
1 points
Question 23
Beta coefficients
1. are a measure of systematic risk
2. relate the return on an individual security to the return on the market
3. measure the variability of as asset's return
Answer
1 and 2
1 and 3
2 and 3
all of these choices
1 points
Question 24
Sources of unsystematic risk include
1. the firm's financing decisions
2. the firm's operations
3. fluctuating market prices
Answer
1 and 2
1 and 3
2 and 3
all of these choices
1 points
Question 25
Which is the largest if interest rates are 7 percent?
Answer
$100 compounded for three years
the future value of a $100 annuity for three years
the present value of $100 after three years
the present value of a $100 annuity
Explanation / Answer
as u think
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