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Chapter8 - systematic risk Selected Answer Correct Answer...

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Question 1 1 out of 1 points In the financial markets, risk is the notion or probability of something bad happening. Selected Answer: Correct Answer: Question 2 1 out of 1 points You are calculating an expected return for an investment. You estimate that there is a 50% chance that the investment will return 100% in the next year, and a 50% chance that it will return 0%. Given these estimates, the "expected return" next year for this investment is _____%. Selected Answer: Correct Answer: Question 3 1 out of 1 points The most common approach for measuring an investment's
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total risk is calculating the __________. Selected Answer: Correct Answer: Question 4 1 out of 1 points In finance, the concept of "risk" includes both upside risk (i.e. a return that surprises to the upside) and downside risk (i.e. a return that surprises to the downside). Selected Answer: Correct Answer: Question 5 1 out of 1 points Which of the following is an example of systematic risk?
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Unformatted text preview: systematic risk? Selected Answer: Correct Answer: Question 6 1 out of 1 points Which of the following is an example of a firm-specific risk factor? Selected Answer: Correct Answer: Question 7 1 out of 1 points In the context of an investment portfolio, higher correlation among assets (i.e., investments) means greater diversification. Selected Answer: Correct Answer: Question 8 1 out of 1 points Systematic risk (also known as "market risk") can be diversified away by holding more assets (e.g. stocks) in your portfolio. Selected Answer: Correct Answer: Question 9 1 out of 1 points In finance, the most common measure of systematic risk is __________. (Hint: Do not confuse systematic risk with total risk.) Selected Answer: Correct Answer: Question 10 1 out of 1 points The CAPM is very important and I look forward to learning more about it in class. (Hint: Answer true if you know what's best for you.) Selected Answer: Correct Answer:...
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