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DIRECTIONS: Here is the Week03 Non-Graded Quiz Answer Sheet that you should submit to your P3- Homework Assignment Folder.

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DIRECTIONS: Here is the Week03 Non-Graded Quiz Answer Sheet that you should submit to your P3- Homework Assignment Folder.

Please submit your Week03 Non-Graded Quiz in MS Word fromat with the following file name: LastNameFirstInitial_Week03NonGradedQuizAnswerSheet.docx. For example, if you name is John Smith, the file name of your Answer Sheet should be SmithJ_Week03NonGradedQuizAnswerSheet.docx.

If you have any questions or comments, please do not hesitate to contact me.

NAME: _____________________________________

Non-Graded

Quiz Number

Question

1

Risk is

A:Variability in expected return

B:The potential for loss

C:The possibility returns may be positive, zero, or negative

D:Uncertainty of a future outcome

E:All of the above are acceptable definitions

2

Strategies to help manage investment risk include:

A:Asset allocation

B:Professional management

C:Diversification

D:All of the above are potential strategies to reduce investment risk

E:None of the above will have any impact on investment risk

3

Changes in financial risk affects a company’s

A:Stock price

B:Availability of credit lines

C:Cost to borrow

D:All of the above are affect by changes in financial risk

E:B and C are affected, but A is not

4

If interest rates increase, prices of previously issued bonds will

A:Decrease

B:Increase

C:Bond prices are not affected by changes in interest rates

5

The standard deviation:

A:Is always positive or zero

B:Is the square-root of the covariance

C:Is a measure of the total risk of the asset

D:All of the above are true

E:A and C are true, but B is false

6

The degree to which two variables move in a systematic or predictable way is the

A:Beta

B:Covariance

C:Variance

D:Skewness

E:R-Square

7

Two securities that are perfectly positively correlated

A:Are considered to be independent securities

B:Have a correlation of 0

C:Provide no diversification benefits

D:Have a negative covariance

E:Are a benefit to the portfolio

8

Investing overseas induces all of the following potential risks EXCEPT:

A:Political risk

B:Currency risk

C:Agency risk

D:Foreign taxation risk

E:Liquidity risk

9

U.S. investors in U.S. Treasury securities need to be most concerned about which of the following risk factors:

A:Liquidity risk

B:Event risk

C:Currency risk

D:Inflation risk

E:Default risk

10

The best guess of the anticipated return for some future period is the

A:Actual return

B:Expected return

C:Realized return

D:Unexpected return

E:None of the above

11

A probability distribution

A:Consists of all possible outcomes and the probability of each outcome occurring

B:May have an infinite number of possible outcomes

C:Must have probabilities that sum to 1.0

D:All of the above are true

E:A and C are true, but B is false

12

Standard deviation

A:Measures return

B:Is the same as skewness

C:Measures the average amount values differ from the mean

D:Measures the relationship between observations

E:All of the above are true

 
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