Investments Flashcards
Which of the two aspects of the CAPM is used to express the risk/return relationship for an individual security?
Security Market Line (SML)
Which of the following is not a passive asset allocation technique?
The advance/decline line is a technical indicator, which reflects an active approach to investing
Which two elements would probably have the highest correnation:
i. Equity Investments
ii. Preferred Stocks
iii. Real Estate
iv. Bonds
Preferred stocks and bonds.
Why? Both are price sensitive to interest rates
What is true of The Arbitrage Pricing Theory?
ATP has the expected value of each factor as zero
Is it possible to have a negative intrinsic value?
No.
If I.V. is a negative number, then I. V. is zero
What type of option has the highest potential for profit?
Buying a call
