Posted: May 13th, 2018

CHAMINADE MBA754 WEEK 5 CH 5 quiz

Question 1. Question
:
Maximum international diversification can be achieved by
investing solely in U.S. multinational corporations.

:
True
False
Points Received: 1 of 1
Comments:

Question 2. Question
:
Traditional portfolio management

: IN concentrates on only the most recent
“hot” sectors of the market.
typically centers on interindustry
diversification.
includes only diversified bonds in a laddered
portfolio.
is based on statistical measures to develop
the portfolio plan.
Points Received: 0 of 1
Comments:

Question 3. Question
:
Which one of the following conditions can be effectively
eliminated through portfolio diversification?

:
a general price increase nationwide
an interest rate reduction by the Federal
Reserve
increased government regulation of auto
emissions
change in the political party that controls
Congress
Points Received: 1 of 1
Comments:

Question 4. Question
:
Diversifiable risk is also called systematic risk.

:
True
False
Points Received: 1 of 1
Comments:

Question 5. Question
:
Currency exchange rate risk can be hedged using forwards,
futures and options.

: True
False
Points Received: 1 of 1
Comments:

Question 6. Question
:
Portfolio objectives should be established before beginning
to invest.

: True
False
Points Received: 1 of 1
Comments:

Question 7. Question
:
A stock with a beta of 1.3 is less risky than a stock with a
beta of 0.42.

:
True
False
Points Received: 1 of 1
Comments:

Question 8. Question
:
A beta of 0.5 means that a stock is 5% more risky than the
overall market.

:
True
False
Points Received: 1 of 1
Comments:

Question 9. Question
:
Perfectly negatively correlated assets have a correlation
coefficient of plus one.

:
True
False
Points Received: 1 of 1
Comments:

Question 10. Question
:
A portfolio with a beta of .5 will be 50% more volatile than
the market portfolio.

: IN True
False
Points Received: 0 of 1
Comments:

Question 11. Question
:
The Dow Jones Industrial Average of thirty stocks is a
suitable proxy for market returns in the CAPM.

: IN True
False
Points Received: 0 of 1
Comments:

Question 12. Question
:
Standard deviation is a measure that indicates how the price
of an individual security responds to market forces.

:
True
False
Points Received: 1 of 1
Comments:

Question 13. Question
:
Aggressive investors tend to prefer investing solely in
negative beta stocks in a bull market.

:
True
False
Points Received: 1 of 1
Comments:

Question 14. Question
:
Both the efficient frontier and beta are important aspects
of MPT.

: True
False
Points Received: 1 of 1
Comments:

Question 15. Question
:
Correlation is a measure of the relationship between two
series of numbers.

: True
IN False
Points Received: 0 of 1
Comments:

Question 16. Question
:
A coefficient of determination of 0.6 means that 40% of the
variation in a security’s return is related to factors other than the
security’s relationship to the market.

: True
False
Points Received: 1 of 1
Comments:

Question 17. Question
:
Systematic risks

:
can be eliminated by investing in a variety of economic sectors.
are forces that affect all investment
categories.
result from random firm-specific events.
are unique to certain investment vehicles.
Points Received: 1 of 1
Comments:

Question 18. Question
:
Historical betas are always reliable predictors of future
return fluctuations.

:
True
False
Points Received: 1 of 1
Comments:

Question 19. Question
:
Beta measures diversifiable risk while standard deviation
measures systematic risk.

: True
False
Points Received: 0 of 1
Comments:

Question 20. Question
:
Betas must be positive numbers.

:
True
False
Points Received: 1 of 1
Comments:

Question 21. Question
:
The best stock to own when the stock market is at a peak and
is expected to decline in value is one with a beta of

: +1.5.
+1.0.
-1.0.
-0.5.
Points Received: 0 of 1
Comments:

Question 22. Question
:
Arbitrage pricing theory suggests that there are a number of
factors that affect the risk premium of a security.

: True
False
Points Received: 1 of 1
Comments:

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