ashworth college BU340 Online Exam 8 latest 2016 march

Part 1 of 1 – Lesson 8 Questions 80.0/ 100.0 Points

Question 1 of 20
0.0/ 5.0 Points
Find the variance for a security that has three one-year
returns of -5%, 15%, and 20%.
A. 175%
B. 75%
C. 58.33%
D. 25%

Question 2 of 20
5.0/ 5.0 Points
The terms __________ and __________ mean the same thing.
A. nondiversifiable
risk; unsystematic risk
B. diversifiable
risk; systematic risk
C. diversifiable
risk; unsystematic risk
D. total risk;
unique risk

Question 3 of 20
5.0/ 5.0 Points
__________ may be defined as a measure of uncertainty in a
set of potential outcomes for an event in which there is a chance for some
loss.
A. Diversification
B. Risk
C. Uncertainty
D. Collaboration

Question 4 of 20
5.0/ 5.0 Points
Given an expected market return of 12.0%, a beta of 0.75 for
Benson Industries, and a risk-free rate of 4%, what is the expected return for
Benson Industries?
A. 13%
B. 10%
C. 9%
D. 4%

Question 5 of 20
5.0/ 5.0 Points
The security market line has:
A. a positive slope.

B. a negative slope.

C. no slope.
D. a beta of 1.0.

Question 6 of 20
0.0/ 5.0 Points
Both assets B and C plot on the SML. Asset B has a beta of
1.3 and an expected return of 13.1%. Asset C has a beta of .50 and an expected
return of 7.5%. The risk-free rate is 4% and the expected return on the market
portfolio is 11%. If you wish to hold a portfolio consisting of assets B and C,
and have a portfolio beta equal to 1.0, what proportion of the portfolio must
be in asset C?
A. 0.375
B. 0.50
C. 0.625
D. 0.75

Question 7 of 20
0.0/ 5.0 Points
The security market line:
A. is curvilinear
and upward sloping.
B. is curvilinear
and downward sloping.
C. may curve up or
down depending upon market conditions.
D. is a straight
line.

Question 8 of 20
5.0/ 5.0 Points
The __________ is the intercept on the security market line.
A. prime rate
B. risk-free rate
C. market rate of
return
D. beta

Question 9 of 20
5.0/ 5.0 Points
__________ is the absence of knowledge of the outcome of an
event before it happens.
A. Return
B. Diversification
C. Uncertainty
D. Certainty

Question 10 of 20
5.0/ 5.0 Points
Stocks A, B, C, and D have standard deviations,
respectively, of 20%, 5%, 10%, and 15%. Which one is the riskiest?
A. Stock A
B. Stock B
C. Stock C
D. Stock D

Question 11 of 20
5.0/ 5.0 Points
Jarvis bought a share of stock for $15.75 that paid a
dividend of $.45 and sold three months later for $18.65. What was his dollar
profit or loss and holding period return?
A. $2.90, 18.41%
B. $3.35, 21.27%
C. -$2.90, -18.41%
D. $.45, 2.86%

Question 12 of 20
5.0/ 5.0 Points
The correlation coefficient, a measurement of the comovement
between two variables, has what range?
A. From 0.0 to +10.0

B. From 0.0 to +1.0
C. From -1.0 to
+10.0
D. From =1.0 to -1.0

Question 13 of 20
0.0/ 5.0 Points
For most stocks, the correlation coefficient with other
stocks is:
A. positive.
B. negative.
C. zero.
D. The distribution
of correlation coefficients between stocks is uniform from -1.0 to +1.0.

Question 14 of 20
5.0/ 5.0 Points
Which of the following investments is considered to be
default risk-free?
A. Currency options
B. AAA-rated
corporate bonds
C. Common stock
D. Treasury bills

Question 15 of 20
5.0/ 5.0 Points
The primary benefit of diversification is:
A. an increase in
expected return.
B. an equal
reduction in risk and return.
C. a reduction in
risk.
D. Diversification
has no real benefit; it is a shell game promoted by
investment advisors who are the only real winners.

Question 16 of 20
5.0/ 5.0 Points
__________ is risk that cannot be diversified away.
A. Unsystematic risk

B. Systematic risk
C. Firm-specific
risk
D. Diversifiable
risk

Question 17 of 20
5.0/ 5.0 Points
The practice of not putting all of your eggs in one basket
is an illustration of:
A. variance.
B. diversification.
C. portion control.
D. expected return.

Question 18 of 20
5.0/ 5.0 Points
Unsystematic risk:
A. is also known as
nondiversifiable risk.
B. can be
diversified away.
C. is system-wide
risk.
D. is equal to 2
times the systematic risk.

Question 19 of 20
5.0/ 5.0 Points
Joe bought a share of stock for $47.50 that paid a dividend
of $.72 and sold one year later for $51.38. What was Joe’s dollar profit or
loss and holding period return?
A. $0.72, 7.55%
B. $3.88, 8.95%
C. $4.60, 9.68%
D. $3.88, 9.68%

Question 20 of 20
5.0/ 5.0 Points
Correlation, a standardized measure of how stocks perform
relative to one another in different states of the economy, has a range from:
A. 0.0 to +10.0.
B. 0.0 to +1.0.
C. -1.0 to +1.0.
D. There is no
range; correlation is a calculated number that can take on any value.