012017 Irwestment Risk an Portolio Management MCQs Paper | AccountrgAsk.com McQS PAPERS DEFINITIONS aU ate fd Gold a) DRS RL ae yen Categories Investment Risk and Portfolio Management Paper 4 o G Suite by Google Cloud Collaborate in real time and increase productivity. Start ‘The risk to which all investment securities are subject is known as iversiable ris, ‘One type of risk to which investment securities are subject can be offset throuch portfolio diversification type of risk is refered to as equity risk ‘A company holds industrial development bonds issued by @ county In another state, The county commis: has announced that ts financial condition has changed drestically and that it's considering defaulting on ‘ext interest and principal payment on these bonds. This situation exposes the company to all ofthe fallowing ty ofrisk except Which one ofthe following lists properly ranks financial instruments In order from the highest risk/oppertu {or return to the lowest risk/oppo:tunty for return? hipshwur accountingask comipapersiinvestment-Risk-anc-Prtelio- Managomert-papar-4 19012017 Probl ase spisly sean oa ate Anat hipshwur accountingask comipapersiinvestment-Risk-anc-Patelio-Managomert-paper-4 Irwestment Risk an Portolio Management MCQs Paper | AccountrgAsk.com ‘Common stock, prefered stock, income bonds, mortgage 3, debertires, US. Treasury bone In theory, which of the following coatficients of corelaton would eliminate risk in an investment portfolio? oo. No thecretical coefficlen exists forthe elination of risk in » portfolio conto Listed below are four numbers. Which of these numbers represents the coefficient of corrolation of a st portfolio withthe least risk? ‘The incremental benefts of portfolio civersifcation intial decrease as the number of cifferent securties F Inreases, The benefits become extremely small when mare than about diferent secunties ete 101020 2010 40, 40% 50. ldTime, Inc, Is a mature frm operating in a very stable market. Earings growth has averaged about 3. {or the last dozen years, just staying inline with ination, The firm's weighted-average cost of capitals € ‘much ower than most firms, John Storms has just been hired as OldTime’s new CEO and wants to turn what he ¢ 1 “cash cow” into a “growth company.” Storms wants to reduce the dividend pay-out and use the resutingretal earings to fund the firm's expansion Into new product lines. OlaTime’s historical beta has been about .. With CEO's changes, what will most Ikely happen to OldTime’s beta and the required return on Investment ints share: “The beta wil fal, nd the required return wil ee. ‘The beta wil rise, and te requied returs wil al If the return on the market portfolo 's 109% and the risk-free rate Is 5%, what Is the effect on @ compar require rate of return on its stock of an increase inthe beta coefficient from 1.2 to 1.5? 2% tnroase. No change.012017 poste “ ering apt Copyone @ 2035, ipshwur accountingask comipapersiinvestment-Risk-anc-Prtelio-Managomert-paper-4 Irwestment Risk an Portolio Management MCQs Paper | AccountrgAsk.com ‘The comman stock of Wisconsin's Finest Cheese has a beta coefTiclent of. The folowing information at overall market conditions is available, Expected return on U.S. Treasury bonds 69% Expected return on the market portfolio 8.5% Using the capital asset pricing model (CAPM), what is the risk premium on the market? Result. “etn ra son en 4-130 hGrinding Mill .