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FINC 340: INVESTMENTSUNIT #7A WEEKLY QUIZ QUESTION SHEETDIRECTIONS

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FINC 340: INVESTMENTSUNIT #7A WEEKLY QUIZ QUESTION SHEETDIRECTIONS: Here is the Unit #7 Weekly Quiz Question Sheet that you should submit to your Unit#7 Homework Assignment Folder.Please submit your Unit #7 Quiz Answer Sheet in MS Word format with the following file name:LastNameFirstInitial_Unit 07_QuizAnswerSheet.docx. For example, if you name is John Smith, thefile name of your Answertion Sheet should be SmithJ_Unit07_QuizAnswerSheet.docx.If you have any questions or comments, please do not hesitate to contact me.NAME: _____________________________________QuestionNumberQuestion1Which of the following statements concerning the Markowitz efficient frontier iscorrect?A. A portfolio that offers the highest rate of return with the lowest degree ofrisk is on the efficient frontier.B. A portfolio that offers the lowest rate of return for a higher degree of risk ison the efficient frontier.C. A portfolio that offers the lowest degree of risk for a given rate of return isabove the efficient frontier.D. A portfolio that offers the highest rate of return for a given degree of riskison the efficient frontier.2The goal of asset alloction is to reduce risk through diversification by havingexposure to a variety of investments that perform differently during differentmarket conditions. According to Schwab, in recent years the following haschanged:I.Assets are more correlatedII.Less external shocksIII.Bond yields are lowIV.Expected stock retruns are lowerA. I, II, IIIB. I, III, IVC. I, II, IVD. II, III, IV1
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3Which of the following statements concerning beta coefficients is (are) correct?I.Investors who tend to be risk averse should have portfolio made upmostly of high-beta coefficient securitiesII.Beta coefficients of particular securities change over time.III.Beta coefficients are constructed based on past data.A. (I) onlyB. (I) and (III) onlyC. (I) and (II) onlyD. (II) and (III) only4List three advantages of asset allocationI.Smooths out the ups and downs of the marketII.Shows that is pays to have your eggs in one baseketIII.Allows for diversificationIV.Helps to mitigate downside riskA. (I), (II), (III)B. (I), (III), (IV)C. (II), (III), (IV)D. (I), (II), (IV)5Which of the following is not likely to be found in the portfolio of a typical moneymarket mutual fund?A. Collateralized mortgage obligations (CMOs)B. U.S. Treasury billsC. Negotiable certificates of depositD. Commercial paper6According to Harry Markowitz, the only “free lunch in finance” is:A. When assets move in harmony, then a diversified portfolio will have lessrisk.B. A diversified portfolio cannot deliver more than the sum of its parts.C. Perfectly correlated individuals assets provide this “free lunch”.D. Diversification can deliver benefits over time at no additional cost .2
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