Test 1
Stock A has a beta of 1.2 and Stock B has a beta of 1. The returns of Stock A are _____ sensitive to changes in the market as the returns of Stock B A. 20% more B. Slightly more C. 20% less D. Slightly less
A
Some diversification benefits can be achieved by combining securities in a portfolio as long as the correlation between the securities is _________. A. 1 B. less than 1 C. between 0 and 1 D. less than or equal to 0
B
The ______ requires full disclosure of relevant information relating to issuance of new securities. A. Insider Trading Act of 1931 B. Securities Act of 1933 C. Securities Exchange Act of 1934 D. Investment Company Act of 1940
B
Beta is a measure of _________. A. firm specific risk B. diversifiable risk C. market risk D. unique risk
C
The _____ could be used in an index model to represent common or systematic risk factors. A. firm size B. industry C. S&P 500 index D. capital allocation line
C
Which of the following is not a money market instrument? A. Treasury Bill B. Commercial Paper C. Preferred Stock D. Banker's Acceptance
C
With respect to mutual funds, late trading refers to the practice of A. Trading after close of U.S. markets but before overseas markets have closed B. Trading after the close of overseas markets, but before U.S. markets have closed C. Accepting buy or sell orders after the market closes and NAV has already been determined for the day D. Paying capital gains distributions to certain investors only after paying privileged investors first
C
_________ is a true statement regarding risk averse investors. A. They only care about the rate of return B. They only accept investments that are fair games C. They only accept investments that offer risk premium over the risk-free rate D. They are willing to accept lower return and high risk
C
Risk that can be eliminated through diversification is called ____ risk. A. unique B. firm-specific C. diversifiable D. all of the above
D
Risk that can be eliminated through diversification is called ______ risk. A. Unique B. Firm-specific C. Diversifiable D. All of the above
D
