Q1. Which of the following statements about risk aversion is TRUE?
A) Given a choice between two assets with equal rates of return, the investor will always select the asset with the lowest level of risk. B) Risk averse investors will not take on risk. C) Risk aversion implies that the risk-return line, the CML, and the SML are downward sloping curves.
Q2. The basic premise of the risk-return trade-off suggests that risk-averse individuals purchasing investments with higher non-diversifiable risk should expect to earn:
A) lower rates of return. B) rates of return equal to the market. C) higher rates of return.
Q3. Which of the following statements is NOT consistent with the assumption that individuals are risk averse with their investment portfolios?
A) Higher betas are associated with higher expected returns. B) Many individuals purchase lottery tickets. C) There is a positive relationship between expected returns and expected risk.
Q4. Risk aversion means that if two assets have identical expected returns, an individual will choose the asset with the:
A) higher standard deviation. B) lower risk level. C) shorter payback period.
Q5. Which of the following statements about portfolio diversification is TRUE? A) When a risk-averse investor is confronted with two investment opportunities having the same expected return, the investor will take the opportunity with the lower risk. B) The efficient frontier represents individual securities. C) As the correlation coefficient moves from +1 to zero, the potential for diversification diminishes.
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发表于 2009-1-22 10:16
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