chapter 6 Flashcards
1
Q
Which of the following is true of risk and expected returns?
A
Higher the risk, higher the expected returns are.
2
Q
Total holding period return is the dollar gain (or loss) from purchasing an asset and selling it later. T or F?
A
False
3
Q
The greater the risk associated with an investment, the greater is its
A
expected return
4
Q
Historically, the standard deviation of the returns from investing in large U.S. stocks has been greater than the standard deviation of the returns from investing in small U.S. stocks. T or F?
A
False.
5
Q
Why is there a limit to the benefits of diversification?
A
Diversification cannot eliminate market risk.
6
Q
The systematic risk of an investment is measured by
A
its beta
7
Q
A stock’s beta is a measure of its
A
nondiversifiable, systematic or market risk.
