Exam 12: Financial Return and Risk Concepts

The ____________ the coefficient of variation, the ____________ the risk.

The Capital Asset Pricing Model (CAPM) states that the expected return on an asset depends upon its level of:

As defined in accordance with efficient markets notions, a strong-form efficient market would be a market in which asset prices reflect all:

The risk caused by variations in interest expense unrelated to sales or operating income arising from changes in the level of interest rates in the economy is called:

If the variance for Stock A is greater than the variance for Stock B, then the coefficient of variation for Stock A:

Portfolio risk is comprised of:

In an efficient market, it is difficult to consistently find stocks whose prices do not fairly reflect the present values of future expected cash flows.

If we assume that asset X has an expected return of 10 and a variance of 10, then its coefficient of variation is:

The total risk of a well-diversified portfolio of U.S. stocks appears to be about what proportion of the risk of an average one-stock portfolio?

Which of the following statements is false?

A stock that went from $32 per share at the beginning of the year to $35 at the end of the year and paid a $2 dividend provided an investor with a ____ return.

The benefits of diversification are greatest when asset returns have:

If the expected return is 10%, the standard deviation is 3%, about 68% of the time returns will be expected to fall between 10% and 13%.

As defined in accordance with efficient markets notions, a weak-form efficient market would be a market in which asset prices reflect all:

The total risk of a well-diversified international portfolio of stocks appears to be about what proportion of the risk of an average one-stock portfolio?

Which of the following statements is most correct?

The risk caused by variations in income before taxes over time because fixed interest expenses do not change when operating income rises or falls is called:

Assume the probability of a pessimistic, most likely and optimistic state of nature is .25, .45 and .30, and the returns associated with those states of nature are 10%, 12%, and 16% for asset X. Based on this information, the expected return and standard deviation of return are:

Between 1928 and 2018, the average annual return on common stocks averaged _____%, while the average annual return on Treasury bonds averaged _____%.

Both closed-end and open-ended funds sell shares to investors on an on-going basis.