EMG3225 - FINAL EXAM Study Quizzes - Finance EMG3225...

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Finance EMG3225 – Practice Quizzes for Final ExamChapter 7 – Risk and Return1.The expected return and theweighted average return from aninvestment are always the same.A.TrueB.False
2.If an expected return of apotential investment is negative,then the standard deviation of therisk associated with thatinvestment is negative.
3.Historically, the standarddeviation of the returns frominvesting in large U.S. stocks hasbeen greater than the standarddeviation of the returns frominvesting in small U.S. stocks.
4.The coefficient of variation is auseful measure for comparingbetween alternatives withdifferent expected returns anddifferent standard deviations.
5.Market risk is synonymous forsystematic risk.A.TrueB.False
6.The Security Market Line is thegraphic representation of theCapital Asset Pricing Model.
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Chapter 5 / Exercise 5.11
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7.Diversification provides a benefitto investors when:
8.Which of the following is the bestmeasure of the risk of one asset'sreturns?
9.A stock's beta is a measure of its:A.market riskB.unsystematicriskC.uniqueriskD.diversifiablerisk
10.The beta of a stock is the slope of:
11.A stock with a beta greater thanone has returns that are _____volatile than the market and astock with a beta less than one hasreturns that are _____ volatilethan the market.
12.Why is there a limit to the benefitsof diversification?
13.What is the expected return of thefollowing?A.12.4%B.18.2%C.12%D.12%.
14.If an investor were comparingAsset Q, which has an expectedreturn of 6.5% and a standarddeviation of 4.3% to Asset U,which has an expected return of8.8% and a standard deviation of5.5% and to Asset B, which has anexpected return of 8.8% and astandard deviation of 6.5%, whichwould she choose?

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Financial Reporting, Financial Statement Analysis and Valuation
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Chapter 5 / Exercise 5.11
Financial Reporting, Financial Statement Analysis and Valuation
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