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Quiz #2 -- FTMBA CORPFIN 2019 Flashcards | StudBud
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Quiz #2 -- FTMBA CORPFIN 2019
Quiz #2 -- FTMBA CORPFIN 2019
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Flashcards
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1
Stock portfolios offering the highest return for any given level of risk are ...
... called efficient portfolios.
... impossible to achieve.
... not good portfolios to invest in.
... are too risky to invest in.
2
Value stock is a stock ...
... of a large firm.
... with low book-to-market ratio.
... with high book-to-market ratio.
... of a small firm.
3
If a certain stock lies above the security market line, then ...
... a rational investor will buy it.
... it is an inefficient investment.
... it has too much risk.
... it is overpriced.
4
Historically, high book-to-market stocks relative to low book-to-market stocks earned ...
... a higher return in average.
... a lower return in average.
... the same return in average.
... different returns in average.
5
Greater spread of returns is an indication of a ...
... bad stock.
... greater risk.
... lower return.
... good stock.
6
Which of the following is INCORRECT about the Sharpe ratio?
It is the ratio of risk premium to standard deviation.
It shows the risk premium earned per unit of risk.
Higher Sharpe ratio indicates more efficient portfolio.
It is fixed in the long-run investment horizon.
7
If you measured the beta of a portfolio consisting of all stocks in the market, it would be ...
... equal to one.
... negative.
... equal to zero.
... higher than one.
8
Historically, the daily price changes of stocks seem to be ...
... predictable.
... linear.
... normally distributed.
... abnormally distributed.
9
The line connecting treasury bills with the market portfolio on a return versus beta graph ...
... is normally downward sloping.
... is called the security market line.
... is a horizontal line.
... is a curve.
10
What is NOT helpful in identifying the best portfolio amongst the efficient portfolios?
The market portfolio.
The risk-free rate.
Specific risk of stocks in the portfolio.
The Sharpe ratio.
