MGNT 3125_Chapter 8_reviewquestions

MGNT 3125_Chapter 8_reviewquestions - MGNT 3125 Fall 2010...

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MGNT 3125 Fall 2010 Dr. Amine Khayati Chapter 8 Review questions 1 - An investor's portfolio is the . ...................... the investor owns. The percentages of a portfolio's total value invested in each asset are the . ............................... a- combination of assets; portfolio weights b- combination of assets; assets expected returns c- combination of voting rights; assets' expected variances d- dividend rights; securities expected returns 2 - The variance and standard deviation of a portfolio . ............. equal to weighted averages of the corresponding characteristics of the individual securities. For most portfolios, the standard deviation is generally . .............. the weighted average of the standard deviations of the securities in the portfolio. a- are not; more than b- are not; less than c- are; equal to d- are; less than 3 - The actual return on a security consists of two parts: the expected return and the unexpected return. The risk of an asset comes from the . ....................... part. a- expected b- unexpected c- diversifiable d- unsystematic 4 - A . ................... risk factor tends to affect a large number of assets to a greater or lesser degree. However, an . .............. risk factor affects only a single or small group of assets. a- systematic; market b- systematic; non-diversifiable c- unsystematic; systematic d- systematic; unsystematic 5 - The process of investing is a portfolio of several assets to reduce risk is called . .................... . The standard deviation of a portfolio decreases as the number of securities in the portfolio . ............... a- asset allocation; decrease b- diversification; increase c- diversification; decrease d- securitization; increase 1
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6 - Risk that is eliminated by diversification is . ................... or . .................. risk. However, there is a minimum level of risk in a portfolio of common stocks which cannot be eliminated by diversification; this minimum level is referred to as . ........................ or . ..................... risk. a- diversifiable - unsystematic; non-diversifiable - systematic b- diversifiable - systematic; non-diversifiable - unsystematic c- non-diversifiable - unsystematic; diversifiable - systematic d- non-diversifiable - systematic; diversifiable - unsystematic 7 - Which of the following best define the portfolio weight? a- The total market value of a portfolio divided by the total book value of that portfolio b- the total number of shares invested in a particular asset divided by the total number of shares held in a portfolio. c- The dividends payments divided by the total current market value of a portfolio d- the percentage of a portfolio's total value that is invested in a particular asset. 8
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This note was uploaded on 11/06/2010 for the course MGNT 3125 taught by Professor Warsi during the Spring '08 term at SPSU.

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MGNT 3125_Chapter 8_reviewquestions - MGNT 3125 Fall 2010...

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