DIRECTIONS: 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, the file 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: _____________________________________Question NumberQuestion1Which of the following risks confronting ABC Worldwide, Inc. is an example of an unsystematic risk?A possible decline in the value of its holdings of short-term securities due to fluctuation in interest ratesA possible decline in its earnings due to a strike by its employeesA possible decline in the purchasing power of its net income due to inflationsA possible decline in its net worth due to the need to reinvest funds from an investment at a lower rate than was earned initially2According to Markowitz risk can be:Minimized and eliminated without diversificationEliminated without compromizing the overall returnsMinimized by selecting an optimum combination of investmentsAnalyzed exclusively3Which of the following statement(s) concerning beta coefficients is (are) correct?Investors who tend to be risk averse should have a portfolio made up mostly of high-beta-coefficient securities.Beta coefficients of particular securities change over timeBeta coefficients are constructed based on past data(1) only(1) and (3) only(1) and (2) only(2) and (3) only4A measure of the degree to which two variables move predictably is known asA. CovarianceB. Standard deviationC. Semi-varianceD. Positive selection5Which of the following concerning the standard deviation of a stock’s rate of return is (are) correct:The standard deviation of a stock’s rate of return reflects both the systematic and unsystematic risks associated with a stockApproximately 68% of the rates of return on the stock will fall within plus or minus one stand deviation of the average rate of return(1) only(2) onlyBoth (1) and (2)Neither (1) nor (2)6Items that circumvent Fisher’s Perfect World include:No barriers to tradeFree flow of informationThe firm’s indepent decisionmakingSatisfying stockholder wealth maximization criteriaInvestor’s receiving regular dividendsI, II, IIII, II, III IV,II, III, IV, VI, II, III, IV, V7Which of the following concerning systematic and/or unsystematic risk is not correct?A.. Unsystematic risk can be reduced through diversification of a portfolioB. A coefficient of determination of .75 in a portfolio means that 75% of the portfolio 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 formulas calculate portfolio risk?Capital Asset Pricing Model (CAPM)Correlation coefficientBetaStandard deviation of the variance of returns9Unsystematic risk is diversifiable:TrueFalse10The beta of a security:Is not the same as its systematic risk levelCan be measured by standard deviationIs the slop of the capital market lineIII onlyII onlyI and III onlyNone of the above11Investment risk can best be defined as the _________ in the expected return of an investment.A.volatilityB.stematic componentC.variabilityD.unsystematic component12Stocks X and Y produced the following returns in recent years:Year Stock X Stock Y1 6% 2%2 8% 0%3 4% 10%4 9% 12%5 11% 14%Avg 7.6% 7.6%Which of the following are the standard deviations of the returns on the two stocks?X = 2.7, Y = 6.2X = 2.7, Y = 4.8X = 3.8, Y = 6.5X = 3.8, & = 5.9View as PageDownloadToggle Fullscreen