2024 – 1 Which of these is a measure summarizing the overall past performance of an

1. Which of these is a measure summarizing the overall past performance of an investment?

Average return

Dollar return

Market return 

Percentage return

2. Which of the following is the reward investors require for taking risk?

Market risk premium

Required return

Risk-free rate

Risk premium

3. Which of the following is defined as the volatility of an investment, which includes firm specific risk as well as market risk?

Market risk

Total risk

Diversifiable risk

Standard deviation

4. Which of these is the set of probabilities for all possible occurrences?

Market probabilities

Probability distribution

Probability

Stock market bubble

5. Which of these is the investor’s combination of securities that achieves the highest expected return for a given risk level?

Efficient portfolio

Total portfolio

Optimal portfolio

Modern portfolio

6. To find the percentage return of an investment:

divide the dollar return by the investment’s value at the beginning of the period.

multiply the dollar return by the investment’s value at the beginning of the period.

multiply the dollar return by the investment’s value at the end of the period.

divide the dollar return by the investment’s value at the end of the period.

7. Which of the following is an index that tracks 500 companies, which allows for a great deal of diversification?

Fortune 500

Wall Street Journal

Nasdaq

S&P 500

8. Which of these is the line on a graph of return and risk (standard deviation) from the risk-free rate through the market portfolio?

Efficient market line

Capital market line

Efficient market hypothesis

Capital asset pricing line

9. Which of the following is a model that includes an equation that relates a stock’s required return to an appropriate risk premium?

Efficient markets

Beta

Behavioral finance

Asset pricing

10. Which of the following is data that includes past stock prices and volume, financial statements, corporate news, analyst opinions, etc.?

Generally accepted accounting principles

Public information

Privately held information

Audited financial statements

11. Which of the following are the stocks of small companies that are priced below $1 per share?

Penny stocks

Hedge fund stocks

Bargain stocks

Stock market bubble stocks

12. TechNo stock was $25 per share at the end of last year. Since then, it paid a $1.50 per share dividend last year. The stock price is currently $23. If you owned 300 shares of TechNo, what was your percent return?

6 percent

-2 percent

6.5 percent     

-8 percent

13. Which of the following is another term for market risk?

Modern portfolio risk

Firm specific risk

Total risk

Nondiversifiable risk

14. Investor enthusiasm causes an inflated bull market that drives prices too high, ending in a dramatic collapse in prices is known as:

privately held information.

efficient market.

behavior finance.

stock market bubble.

15. Which of the following is defined as the portion of total risk that is attributable to firm or industry factors and can be reduced through diversification?

Modern portfolio risk

Firm specific risk

Market risk     

Total risk

16.  Which of the following is a true statement?

If a firm takes on riskier new projects over time, the firm itself will become less risky.

Firms can quite possibly change their stocks’ risk level by substantially changing their business.

The risk and return that a firm experienced in the past is also the risk level for its future.

If a firm takes on less risky new projects over time, the firm itself will become more risky.

17. Which of these is similar to the Capital Market Line, except that risk is characterized by beta instead of standard deviation?

Security market line

Probability market line

Stock market line

Market risk line

18. Which of these includes any capital gain (or loss) that occurred as well as any income that you received from a specific investment?

Portfolio

Average return

Market return

Dollar return

19. In theory, which of these is a combination of securities that places the portfolio on the efficient frontier and on a line tangent from the risk-free rate?

Efficient market

Market portfolio

Stock market bubble  

Probability distribution

20. We commonly measure the risk-return relationship using which of the following?

Expected returns

Correlation coefficient

Coefficient of variation

Standard deviation