Business

Risk that affects all firms is called

Risk that affects all firms is called

Risk that affects all firms is called
A) management risk.
B) nondiversifiable risk.
C) diversifiable risk.
D) total risk.

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________ risk can be eliminated by diversification.

________ risk can be eliminated by diversification.

________ risk can be eliminated by diversification.
A) Market
B) Unsystematic
C) Nondiversifiable
D) Systematic

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Consider a value-weighted market index that includes the two companies shown in the table. What is ...

Consider a value-weighted market index that includes the two companies shown in the table. What is ...

Consider a value-weighted market index that includes the two companies shown in the table. What is the percentage change in the index from Day 1 to Day 2?

   Company 1   Company 1   Company 2   Company 2
Day   Price   # of Shares   Price   # of Share

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Consider a value-weighted market index that includes the following two companies. On Day 1 you form ...

Consider a value-weighted market index that includes the following two companies. On Day 1 you form ...

Consider a value-weighted market index that includes the following two companies. On Day 1 you form a portfolio to mimic the index. (In other words, to earn the same return as the index.)

   Company 1   Company 1   Company 2   Company 2
Day   P

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A popular value-weighted index is constructed out of shares in the two companies, shown in the table ...

A popular value-weighted index is constructed out of shares in the two companies, shown in the table ...

A popular value-weighted index is constructed out of shares in the two companies, shown in the table below. On Day 1 you construct a portfolio that mimics the index with 15% invested in Company 1 and 85% invested in Company 2. On Day 2, what trades d

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In a well-diversified portfolio, the most relevant type of risk to a well-diversified investor is

In a well-diversified portfolio, the most relevant type of risk to a well-diversified investor is

In a well-diversified portfolio, the most relevant type of risk to a well-diversified investor is
A) interest rate risk.
B) unsystematic risk.
C) market risk.
D) exchange rate risk.
E) firm-specific risk.

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In a well-diversified portfolio, the most relevant type of risk to a well-diversified investor is

In a well-diversified portfolio, the most relevant type of risk to a well-diversified investor is

In a well-diversified portfolio, the most relevant type of risk to a well-diversified investor is
A) firm-specific risk.
B) interest rate risk.
C) exchange rate risk.
D) market risk.
E) unsystematic risk.

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If the stock market becomes more risky (e.g. there is greater uncertainty about the economy), the ...

If the stock market becomes more risky (e.g. there is greater uncertainty about the economy), the ...

If the stock market becomes more risky (e.g. there is greater uncertainty about the economy), the beta of the market portfolio increases.

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The slope of the characteristic line is beta.

The slope of the characteristic line is beta.

The slope of the characteristic line is beta.

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Beta is a more relevant measure of risk to an investor with a well-diversified portfolio than to an ...

Beta is a more relevant measure of risk to an investor with a well-diversified portfolio than to an ...

Beta is a more relevant measure of risk to an investor with a well-diversified portfolio than to an investor who holds only one stock.

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________ shows that investors who hold the market portfolio do not care about unsystematic risk.

________ shows that investors who hold the market portfolio do not care about unsystematic risk.

________ shows that investors who hold the market portfolio do not care about unsystematic risk.
A) Beta
B) Capital Asset Pricing Model
C) Variance
D) Stock Market Index

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The change of risk in a portfolio from the addition of one more share of a particular asset to the ...

The change of risk in a portfolio from the addition of one more share of a particular asset to the ...

The change of risk in a portfolio from the addition of one more share of a particular asset to the portfolio is called
A) CAPM.
B) marginal risk.
C) market risk.
D) diversifiable risk.

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The table below gives the historic return over the past five months for the market portfolio and two ...

The table below gives the historic return over the past five months for the market portfolio and two ...

The table below gives the historic return over the past five months for the market portfolio and two assets: A and B. Which of the answers below best describes the historic beta for A and B?

Month   Market   Asset A    Asset B
1   4%   3%   10%

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What is the Beta for a security whose returns do not vary across states of nature (a risk-free ...

What is the Beta for a security whose returns do not vary across states of nature (a risk-free ...

What is the Beta for a security whose returns do not vary across states of nature (a risk-free security)?
A) 0
B) Between 0 and 1
C) 1
D) > 1
E) < 0

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Warren has a portfolio with three stocks as shown in the table. What is the beta of Warren's ...

Warren has a portfolio with three stocks as shown in the table. What is the beta of Warren's ...

Warren has a portfolio with three stocks as shown in the table. What is the beta of Warren's portfolio?

Stock   Required Return   Portfolio Weight   Beta
Raymond's   6.75%   0.4   0.50
Keller Industries   11.43%   0.35   1.50
Huron

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The beta of a portfolio

The beta of a portfolio

The beta of a portfolio
A) does not change over time.
B) is irrelevant, only the betas of the individual assets are important.
C) is the weighted average of the betas of the individual assets in the portfolio.
D) is the sum of

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You want to buy $20,000 worth of shares in Tootsie Roll Industries Inc. on margin, but you only have ...

You want to buy $20,000 worth of shares in Tootsie Roll Industries Inc. on margin, but you only have ...

You want to buy $20,000 worth of shares in Tootsie Roll Industries Inc. on margin, but you only have $10,000 of your own money to invest. The remaining $10,000 is borrowed by issuing T-Bills; assume the cost of borrowing is the risk-free rate. What i

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Your video-game addicted nephew tells you that the Nintendo Wii is much better than the Microsoft ...

Your video-game addicted nephew tells you that the Nintendo Wii is much better than the Microsoft ...

Your video-game addicted nephew tells you that the Nintendo Wii is much better than the Microsoft X-Box. To take advantage of this information, you decide to build a two asset portfolio by buying shares in Nintendo and selling shares short in Microso

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You want to buy $20,000 worth of shares in Tootsie Roll Industries Inc. on margin, but you only have ...

You want to buy $20,000 worth of shares in Tootsie Roll Industries Inc. on margin, but you only have ...

You want to buy $20,000 worth of shares in Tootsie Roll Industries Inc. on margin, but you only have $10,000 of your own money to invest. The remaining $10,000 is borrowed by issuing T-Bills; assume the cost of borrowing is the risk-free rate. The we

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George wants to pick a stock for his Diversified Hedge Fund. The fund has holdings in every country ...

George wants to pick a stock for his Diversified Hedge Fund. The fund has holdings in every country ...

George wants to pick a stock for his Diversified Hedge Fund. The fund has holdings in every country with a stock market. George is trying to decide which asset he should add to his portfolio: Stock A or Stock B. Expected return, Standard deviation an

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You have been scouring The Wall Street Journal looking for stocks to add to your (large) portfolio. ...

You have been scouring The Wall Street Journal looking for stocks to add to your (large) portfolio. ...

You have been scouring The Wall Street Journal looking for stocks to add to your (large) portfolio. The table presents data that you have collected on four stocks that look promising. You have calculated the return that you anticipate earning from ea

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The table below presents performance data for the Socially Responsible mutual fund over the last ...

The table below presents performance data for the Socially Responsible mutual fund over the last ...

The table below presents performance data for the Socially Responsible mutual fund over the last five years. The table also includes information on the returns of the market index and T-Bills over the same period. What is the Treynor Index for Social

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Refer to the performance data for three mutual funds and the market portfolio in the following ...

Refer to the performance data for three mutual funds and the market portfolio in the following ...

Refer to the performance data for three mutual funds and the market portfolio in the following table. Which is the best investment based on its excess return per unit of systematic risk?

   AGF   AIM   Alta   Market   Risk-free
5 year return   0

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The table below shows selected financial data for the Turtle Income fund, the Hare Growth fund, the ...

The table below shows selected financial data for the Turtle Income fund, the Hare Growth fund, the ...

The table below shows selected financial data for the Turtle Income fund, the Hare Growth fund, the market portfolio and the risk free asset. Calculate the Treynor Index for each of the funds. How do the Treynor Index measures for the two funds compa

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You are considering investing in Stock ABC. This stock has an expected return of 14%, the risk free ...

You are considering investing in Stock ABC. This stock has an expected return of 14%, the risk free ...

You are considering investing in Stock ABC. This stock has an expected return of 14%, the risk free rate is 5%, and the market risk premium (or Treynor Index) is 8%. What is the beta of Stock ABC?
A) 0.950
B) 1.125
C) 1.250
D) 1.4

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The table below shows selected financial data for the Turtle Income fund, the Hare Growth fund, the ...

The table below shows selected financial data for the Turtle Income fund, the Hare Growth fund, the ...

The table below shows selected financial data for the Turtle Income fund, the Hare Growth fund, the market portfolio and the risk free asset. If you wanted to build a portfolio out of T-Bills and the market portfolio to mimic the performance of the T

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The order cost per order is $10. Expected sales are 500,000 units and 20,000 units are in each ...

The order cost per order is $10. Expected sales are 500,000 units and 20,000 units are in each ...

The order cost per order is $10. Expected sales are 500,000 units and 20,000 units are in each order. What is the total order cost?
A) $20,000
B) $500,000
C) $250
D) $200,000
E) $2,000

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Many industries offer trade credit so frequently, that failing to do so would result in failure. ...

Many industries offer trade credit so frequently, that failing to do so would result in failure. ...

Many industries offer trade credit so frequently, that failing to do so would result in failure. What is the real credit decision for companies in such industries?
A) What terms to offer
B) Which collection company to use
C) How to obt

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If credit terms are 2/30, net 60, what is the effective annual rate for a customer's loan when the ...

If credit terms are 2/30, net 60, what is the effective annual rate for a customer's loan when the ...

If credit terms are 2/30, net 60, what is the effective annual rate for a customer's loan when the customer pays the invoice in 60 days?
A) 44%
B) 16%
C) 59%
D) 11%
E) 28%

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Optimal credit policy is one in which the

Optimal credit policy is one in which the

Optimal credit policy is one in which the
A) increased cash flow from sales equals the carrying cost of accounts receivable.
B) sales of a firm are maximized.
C) increased profit from sales equals the costs of carrying and administerin

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All of the following are part of the five "Cs" of credit analysis EXCEPT

All of the following are part of the five "Cs" of credit analysis EXCEPT

All of the following are part of the five "Cs" of credit analysis EXCEPT
A) currency.
B) capital.
C) collateral.
D) conditions.
E) capacity.

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A company is offering a discount with terms 3/15 net 40. What is the discount rate associated with ...

A company is offering a discount with terms 3/15 net 40. What is the discount rate associated with ...

A company is offering a discount with terms 3/15 net 40. What is the discount rate associated with this offer?
A) 3%
B) 15%
C) 40%
D) 20%
E) 5%

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Calculate the APR for an invoice that has the terms 1/20 net 45.

Calculate the APR for an invoice that has the terms 1/20 net 45.

Calculate the APR for an invoice that has the terms 1/20 net 45.
A) 14.75%
B) 18.80%
C) 12.25%
D) 15.65%
E) 10.35%

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What is the percentage holding cost per period for a credit with the terms of 2/30 net 60?

What is the percentage holding cost per period for a credit with the terms of 2/30 net 60?

What is the percentage holding cost per period for a credit with the terms of 2/30 net 60?
A) .0101
B) .2787
C) .0667
D) .0204
E) .0352

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Which of the following is not considered a cost for administering the accounts receivable?

Which of the following is not considered a cost for administering the accounts receivable?

Which of the following is not considered a cost for administering the accounts receivable?
A) analyzing credit
B) increased holdings
C) sending out bills
D) collecting past due accounts

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________ can be found where cost of receivables is equal to the revenues from increased sales.

________ can be found where cost of receivables is equal to the revenues from increased sales.

________ can be found where cost of receivables is equal to the revenues from increased sales.
A) Accounts payable
B) Accounts receivable
C) Optimal amount of credit
D) Cost of extending credit

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As the amount of credit extended increases, the ________ decreases.

As the amount of credit extended increases, the ________ decreases.

As the amount of credit extended increases, the ________ decreases.
A) Optimal amount of credit
B) Net cost of receivables
C) Cost of receivables
D) Revenues from increased sales

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Which of the following does not relate to "float"?

Which of the following does not relate to "float"?

Which of the following does not relate to "float"?
A) Stock-outs
B) Check-processing delays
C) Electronic funds transfer (EFT)
D) Concentration banking

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________ float occurs when there is a delay between when a firm issues a check and when the funds ...

________ float occurs when there is a delay between when a firm issues a check and when the funds ...

________ float occurs when there is a delay between when a firm issues a check and when the funds are removed from the checking account balance.
A) Net
B) Book balance
C) Disbursement
D) Collection
E) Electronic funds transfe

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Why might a bank put a hold on a small personal check?

Why might a bank put a hold on a small personal check?

Why might a bank put a hold on a small personal check?
A) Not wanting to disburse funds they have not yet received
B) Requested by the payee
C) Uncertain the check is good
D) Prevent fraud

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