BADM 310 Final
________ measures total risk, and ________ measures systematic risk. Beta; alpha Beta; standard deviation Alpha; beta Standard deviation; beta Standard deviation; variance
Standard deviation; beta
The majority of the diversifiable risk in a portfolio can be eliminated by owning as few as ________ stocks. 5 10 2 40 75
10
Most financial securities have some level of ________ risk. unsystematic Incorrect diversifiable systematic asset-specific industry
Systematic
A ________ is the market's measure of systematic risk. beta of 1 beta of 0 standard deviation of 1 standard deviation of 0 variance of 1
beta of 1
The slope of the security market line is the: expected return of the market. market standard deviation. beta coefficient. risk-free interest rate. market risk premium.
market risk premium
The ________ is a positively sloped linear function that plots securities' expected returns against their betas. reward-to-risk matrix portfolio weight graph normal distribution security market line market real returns
security market line
Of the options listed below, which is the best measure of systematic risk? The weighted average standard deviation Beta The geometric average The standard deviation The arithmetic average
Beta
Which of the following statements regarding unsystematic risk is accurate? It can be effectively eliminated by portfolio diversification. It is compensated for by the risk premium. It is measured by beta. It is measured by standard deviation. It is related to the overall economy.
It can be effectively eliminated by portfolio diversification.
Buchi owns several financial instruments: stocks issued by seven different companies, plus bonds issued by four different companies. Her investments are best described as a(n): index. portfolio. collection. grouping. risk-free position.
Portfolio
To calculate the expected risk premium on a stock, one must subtract the ________ from the stock's expected return. expected market rate of return risk-free rate inflation rate standard deviation variance
Risk-Free Rate
An unexpected post on social media caused the prices of 22 different companies' stocks to immediately increase by 10 to 15 percent. This occurrence is best described as an example of ________ risk. portfolio nondiversifiable market unsystematic expected
Unsystematic
An investor who owns a well-diversified portfolio would consider ________ to be irrelevant. systematic risk unsystematic risk market risk nondiversifiable risk the systematic portion of a surprise
unsystematic risk