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FIN3101 Exam 2 True or False Already Verified A
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FIN3101 Exam 2 True or False Already Verified A False ️the best measure to use when comparing alternative investments is the amount of the dollar gain or loss True ️with holding periods of more than a year, annualizing the HPR makes it smaller True ️the lower the correlation coefficie...

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  • September 27, 2024
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  • 2024/2025
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FIN3101 Exam 2 True or False Already Verified A
False ✔️the best measure to use when comparing alternative investments is the amount of the dollar
gain or loss



True ✔️with holding periods of more than a year, annualizing the HPR makes it smaller



True ✔️the lower the correlation coefficient between two stocks, the greater will be the benefit from
diversifying by combining the two stocks in a portfolio



False ✔️based on the period 1950-1999, you would have the less uncertainty about any expected
return on small company stocks than you would about the expected return on large company stocks



True ✔️our author discusses the average return and standard deviation for 4 different assets for the
period 1950 - 1999



False ✔️"diversifiable risk", "company-specific" risk, "unsystematic" risk and "market" risk all refer to
the same type of risk



True ✔️by diversifying you can eliminate most or all of unsystematic risk



True ✔️the standard deviation is the square root of the variance



False ✔️a stock with one-half the average market risk would have a value for beta of 2.0



False ✔️the only variable on the right-hand side of the CAPM formula that varies from one company to
another is expected return on the market



False ✔️in order to properly evaluate a stock, investors need only consider its risk

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