FINANCE FINAL T/F

1. The best measure to use when comparing alternative investments is the amount of the original investment.

FALSE

2. With holding periods of less than a year, annualizing the HPR makes it smaller.

FALSE

3. The higher the correlation coefficient between two stocks, the greater will be the benefit from diversifying by combining the two stocks in a portfolio.

FALSE

4. Based on the period 1950 - 1999, you would have the less uncertainty about any expected return on small company stocks than you would about the expected return on 3-month T-Bills.

FALSE

6. "Diversifiable" risk, "Company-specific" risk, "Systematic" risk and Market" risk all refer to the same type of risk.

FALSE

7. By diversifying you can eliminate most or all of systemic risk.

FALSE

8. The variance is the square root of the standard deviation.

FALSE

5. Our author discusses the average return and standard deviation for 4 different assets for the period 1950 - 1999.

TRUE