100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
MODULE 2 - INVESTMENT RISK, RETURN, AND PERFORMANCE QUESTIONS AND ANSWERS WITH SOLUTIONS 2024 $15.99   Add to cart

Exam (elaborations)

MODULE 2 - INVESTMENT RISK, RETURN, AND PERFORMANCE QUESTIONS AND ANSWERS WITH SOLUTIONS 2024

 5 views  0 purchase
  • Course
  • AWMA
  • Institution
  • AWMA

MODULE 2 - INVESTMENT RISK, RETURN, AND PERFORMANCE QUESTIONS AND ANSWERS WITH SOLUTIONS 2024

Preview 2 out of 13  pages

  • August 3, 2024
  • 13
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • AWMA
  • AWMA
avatar-seller
Performance
MODULE 2 - INVESTMENT RISK,
RETURN, AND PERFORMANCE
QUESTIONS AND ANSWERS WITH
SOLUTIONS 2024
George's bonds fell in price on news of higher interest rates. To which one of the following risks are
George's bonds most likely to be subject?



A) Interest rate risk

B) Reinvestment risk

C) Financial risk

D) Default risk - ANSWER A) Interest rate risk



Interest rate risk centers on the inverse relationship of interest rate changes and bond prices, so, in this
situation, if interest rates go up, the price of George's bonds go down.



What is the key to building efficient portfolios in traditional-based investing?



A) Diversifying across multiple asset classes

B) Decreasing market beta exposure

C) Decreasing exposure to risk factors

D) Maximizing expected returns - ANSWER A) Diversifying across multiple asset classes



Diversifying across multiple asset classes is the key to building efficient portfolios in traditional-based
investing.



Which of the following are characteristics of the Sharpe ratio?

I. It adjusts the return for variability by using standard deviation as the measure of risk.

II. It assumes that the portfolio being evaluated is well diversified.

III. Both alpha and beta appear in the ratio formula.

, IV. It indicates by how much the realized return differs from the return required by the capital asset
pricing model.



A) III and IV

B) I and II

C) I, II, and IV

D) I only - ANSWER D) I only



Options II, III, and IV are true of Jensen's alpha; option II is true of the Treynor ratio.



Bill is highly confident, strong willed, and difficult to advise. Which one of the following best describes
Bill's investor personality?



A) Individualist

B) Celebrity

C) Adventurer

D) Guardian - ANSWER C) Adventurer



An adventurer is impetuous, confident, strong willed, and difficult to advise.



Assume a growth stock mutual fund has a beta of 1.3. If the stock market increases by 9%, you would
expect this mutual fund to



A) decrease by 11.7%.

B) decrease by 9%.

C) increase by 9%.

D) increase by 11.7%. - ANSWER D) increase by 11.7%.



You would expect any fund with a beta of 1.3 to increase by 11.7% (1.3 × 9%).

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller Performance. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $15.99. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

84146 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 14 years now

Start selling
$15.99
  • (0)
  Add to cart