#1_Midterm Self Evaluation Solutions - Investment Online...

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Investment Online Class UCLA Extension Midterm Self-Evaluation PART I: MULTIPLE CHOICE / SHORT ANSWER QUESTIONS 1. According to the efficient market hypothesis, there should be __________ overpriced and __________ underpriced securities. A) no, no B) no, some C) some, no D) some, some 2. The material wealth of society is determined by the economy's __________, which is a function of the economy's __________. 3. According to the Flow of Funds Accounts of the United States, the largest financial asset of U. S. households is _____. 4. Financial intermediaries exist because small investors cannot efficiently __________. 5. Which of the following statements is most correct? a. Risk refers to the chance that some unfavorable event will occur, and a probability distribution is completely described by a listing of the likelihood of unfavorable events. b. Portfolio diversification reduces the variability of returns on an individual stock. c. When company-specific risk has been diversified the inherent risk that remains is market risk, which is constant for all securities in the market. d. The CAPM / SML relates required returns to firms' market risk. The slope and intercept of this line cannot be controlled by the investment manager. 6. Beta and standard deviation differ as risk measures in that beta measures:
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