One way a company or a person uses their income or profit is by taking up investments. The acquisition of shares is one of the essential methods people choose to use. When it comes to buying security, as taught during security analysis and portfolio management, there are some things we always need to consider. Take this quiz and test how well you understood the topic.
All real assets.
All financial assets.
All physical assets.
All real and financial assets.
None of the above
Choosing which securities to hold based on their valuation
Investing only in "safe" securities
The allocation of assets into broad asset classes
Bottom-up analysis
All of the above
Illiquid.
Owned by government.
Real.
Financial.
Regulated.
Hedge.
Offset debt.
Appease stockholders.
Attract customers.
Enhance their balance sheets.
Contribute to the country's productive capacity both directly and indirectly.
Do not contribute to the country's productive capacity either directly or indirectly
Directly contribute to the country's productive capacity.
Indirectly contribute to the country's productive capacity.
Are of no value to anyone.
Design securities with desirable properties
Market new stock and bond issues for firms
Provide advice to the firms as to market conditions, price, etc
None of them
All of them
The price at which the dealer in T-bills is willing to sell the bill.
The price at which the dealer in T-bills is willing to buy the bill.
Greater than the asked price of the T-bill.
The price at which the investor can buy the T-bill.
Never quoted in the financial press.
I, III, and IV
I, II, and III
I and III
I, II, and IV
I, II, III, and IV
The trader who bought the contract at the largest discount.
The trader who has to travel the farthest distance to deliver the commodity
The trader who plans to hold the contract open for the lengthiest time period
The trader who commits to purchasing the commodity on the delivery date
The trader who commits to delivering the commodity on the delivery date
A) The funds redeem shares at net asset value.
B) The funds offer investors professional management
C) The funds offer investors a guaranteed rate of return
B and C.
A and B.
A) The funds always trade at a discount from NAV.
B) The funds redeem shares at their net asset value.
C) The funds offer investors diversification.
A and B.
None of the above
Record keeping and administration
Professional management
Diversification and divisibility
Lower transaction costs
All of the above
How fat the tails of a distribution are
The downside risk of a distribution
The normality of a distribution
The dividend yield of the distribution
A and C
Standard deviation overestimates risk
Standard deviation correctly estimates risk
Standard deviation underestimates risk
The tails are fatter than in a normal distribution
None of the above
The nominal rate times the inflation rate.
The inflation rate minus the nominal rate.
The nominal rate minus the inflation rate.
The inflation rate divided by the nominal rate.
The nominal rate plus the inflation rate.
15.7%.
12.4%
16.5%
17.8%
11.6%
3%
6%
6.06%
6.09%
None of above
They only accept risky investments that offer risk premiums over the risk-free rate.
They accept investments that are fair games.
They only care about rate of return.
They are willing to accept lower returns and high risk.
A and B.
Proper diversification can reduce or eliminate systematic risk.
The risk-reducing benefits of diversification do not occur meaningfully until at least 50-60 individual securities have been purchased.
Because diversification reduces a portfolio's total risk, it necessarily reduces the portfolio's expected return.
Typically, as more securities are added to a portfolio, total risk would be expected to decrease at a decreasing rate.
None of the above statements are correct.
Securities' returns are positively correlated.
Securities' returns are uncorrelated.
Securities' returns are high.
Securities' returns are negatively correlated.
A and C.
Equal to zero.
Greater than zero.
Equal to the sum of the securities' standard deviations
Equal to -1.
None of the above
Lend some of her money at the risk-free rate and invest the remainder in the optimal risky portfolio.
Borrow some money at the risk-free rate and invest in the optimal risky portfolio.
Such a portfolio cannot be formed
Invest only in risky securities.
B and D
The elimination of systematic risk.
The identification of unsystematic risk
The effect of diversification on portfolio risk.
Active portfolio management to enhance returns.
None of the above
Correlation.
Standard deviation.
Covariance.
Variance.
A and C.
The point of tangency with the opportunity set and the capital allocation line.
The point of highest reward to variability ratio in the opportunity set.
The point of tangency with the indifference curve and the capital allocation line.
The point of the highest reward to variability ratio in the indifference curve.
None of the above