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FINC 340: INVESTMENTSUNIT #6A WEEKLY QUIZ QUESTION SHEETDIRECTIONS

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FINC 340: INVESTMENTSUNIT #6A WEEKLY QUIZ QUESTION SHEETDIRECTIONS: Here is the Unit #6 Weekly Quiz Question Sheet that you should submit to your Unit#6 Homework Assignment Folder.Please submit your Unit #6 Quiz Answer Sheet in MS Word format with the following file name:LastNameFirstInitial_Unit 06_QuizAnswerSheet.docx. For example, if you name is John Smith, thefile name of your Answer Sheet should be SmithJ_Unit06_QuizAnswerSheet.docx.If you have any questions or comments, please do not hesitate to contact me.NAME: _____________________________________QuestionNumberQuestion1Which of the following risks confronting ABC Worldwide, Inc. is an exampleof an unsystematic risk?A. A possible decline in the value of its holdings of short-term securitiesdue to fluctuation in interest ratesB. A possible decline in its earnings due to a strike by its employeesC. A possible decline in the purchasing power of its net income due toinflationsD. A possible decline in its net worth due to the need to reinvest fundsfrom an investment at a lower rate than was earned initially2According to Markowitz risk can be:A. Minimized and eliminated without diversificationB. Eliminated without compromizing the overall returnsC. Minimized by selecting an optimum combination of investmentsD. Analyzed exclusively3Which of the following statement(s) concerning beta coefficients is (are)correct?(1) Investors who tend to be risk averse should have a portfolio made upmostly of high-beta-coefficient securities.(2) Beta coefficients of particular securities change over time(3) Beta coefficients are constructed based on past dataA. (1) onlyB. (1) and (3) onlyC. (1) and (2) onlyD. (2) and (3) only1
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4A measure of the degree to which two variables move predictably is knownasA. CovarianceB. Standard deviationC. Semi-varianceD. Positive selection5Which of the following concerning the standard deviation of a stock’s rate ofreturn is (are) correct:(1) The standard deviation of a stock’s rate of return reflects both thesystematic and unsystematic risks associated with a stock(2) Approximately 68% of the rates of return on the stock will fall withinplus or minus one stand deviation of the average rate of returnA. (1) onlyB. (2) onlyC. Both (1) and (2)D. Neither (1) nor (2)6Items that circumvent Fisher’s Perfect World include:I.No barriers to tradeII.Free flow of informationIII.The firm’s indepent decisionmakingIV.Satisfying stockholder wealth maximization criteriaV.Investor’s receiving regular dividendsA. I, II, IIIB. I, II, III IV,C. II, III, IV, VD. I, II, III, IV, V7Which of the following concerning systematic and/or unsystematic risk isnotcorrect?A.. Unsystematic risk can be reduced through diversification of a portfolioB. A coefficient of determination of .75 in a portfolio means that 75% of theportfolio risk is unsystematicC. A portfolio’s beta is a measure of its systematic riskD. A fully diversified portfolio has no unsystematic risk ‘8Portfolio risks can be calculated. Which of the following statistical formulascalculate portfolio risk?A. Capital Asset Pricing Model (CAPM)B. Correlation coefficientC. BetaD. Standard deviation of the variance of returns9Unsystematic risk is diversifiable:A. True2
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