Question 1

As you add more stocks to a portfolio:

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Question 2

Risks that affect only a single firm are called:

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Question 3

A firm is said to be countercyclical if its returns:

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Question 4

The incremental risk to a portfolio from adding another stock:

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Question 5

The higher the standard deviation of a stock's returns,the:

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Question 6

In general,which stocks should be combined into a portfolio if the goal is the greatest reduction possible in overall portfolio risk?

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Question 7

A stock investor owns a diversified portfolio of 15 stocks.What will be the most likely effect on the portfolio's standard deviation if one more stock is added?

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Question 8

Which one of the following risks can be progressively eliminated by adding stocks to a portfolio?

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Question 9

Companies that are exposed to the business cycle:

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Question 10

The major benefit of diversification is the:

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Question 11

The benefits of portfolio diversification are highest when the individual securities within the portfolio have returns that:

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Question 12

Which one of the following concerns is likely to be most important to portfolio investors seeking diversification?

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Question 13

Which one of the following risks is most important to a well-diversified investor in common stocks?

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Question 14

What is the typical relationship between the standard deviation of an individual common stock and the standard deviation of a diversified portfolio of common stocks?

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Question 15

The standard deviations of individual stocks are generally higher than the standard deviation of the market portfolio because the market portfolio:

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Question 16

Industries that generally perform very well when the entire economy performs well and perform very badly when the economy performs badly are called:

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Question 17

Which one of the following risks would be classified as a specific risk for an auto manufacturer?

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Question 18

What is the standard deviation of returns for an investment that is equally likely to return 100% as it is to provide a 100% loss?

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Question 19

What is the expected return on a portfolio that will decline in value by 13% in a recession,will increase by 16% in normal times,and will increase by 23% during boom times? Each scenario has an equal likelihood of occurrence.

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Question 20

Which statement is correct concerning macro risk exposure?

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Quiz 11: Introduction to Risk, Return, and the Opportunity Cost of Capital