The correlation coefficient, a measurement of the co-movement between two variables, has what range? A) From 0.0 to +10.0 B) From 0.0 to +1.0 C) From -1.0 to +10.0 D) From +1.0 to -1.0 ANSWER Answer: D
Date: September 19th, 2020
You have been asked to analyze two stocks, Stock A and Stock B. The beta of stock A is 1.2, and the beta of stock B is 0.8. The expected return on stock A is 13.5%, the expected return on stock B is 11.0% and the risk-free rate is 7%. We also know that stock […]
Date: September 19th, 2020
Correlation, a standardized measure of how stocks perform relative to one another in different states of the economy, has a range from ________. A) 0.0 to +10.0 B) 0.0 to +1.0 C) -1.0 to +1.0 D) There is no range; correlation is a calculated number that can take on any value. ANSWER Answer: […]
Date: September 19th, 2020
The EOQ model assumes constant demand and constant unit price. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Stock A B C D Expected Return 5% 5% 7% 6% Standard Deviation 10% 12% 12% 11% Which of the following statements is true? A) A is a better investment than B. B) B is a better investment than C. C) C is a better investment than D. D) D is a better investment than […]
Date: September 19th, 2020
If two investments have the same level of risk, a rational investor will choose the investment with the higher expected rate of return. Indicate whether the statement is true or false. ANSWER Answer: TRUE
Date: September 19th, 2020
What are the two investment rules identified in the text? Evaluate the validity of the following statement and justify your reasoning. “Investors do not like risk and will always choose the investment with the least risk.” What will be an ideal response? ANSWER Answer: The two rules identified by the author are: 1. […]
Date: September 19th, 2020
If two investments have the same expected return, a rational investor will choose the investment with the greater risk in an effort to get a much larger return. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: If two investments have the same expected return, a rational investor will choose […]
Date: September 19th, 2020
Which of the statements below is NOT correct? A) If two investments have the same expected return, the investment with the lower risk is preferred. B) If two investments have the same expected return, the investment with the greater risk is preferred. C) If two investments have the same expected risk, the investment with the […]
Date: September 19th, 2020
According to the efficient market theory, A) Prices of actively traded stocks can be under- or over-valued in an efficient market. B) Prices of actively traded stocks can only be under-valued in an efficient market. C) Prices of actively traded stocks do not differ from their true values in an efficient market. D) Prices of […]
Date: September 19th, 2020
