A few finance questions part 2

[dovix85]

I am working on compiling all the answers to over 1000 of these questions in order to create a study guide. Any help would be appreciated: I will break them into a few parts.

1. Which of the following portfolios have the least risk?

A portfolio of treasury bills
A portfolio of long-term United States Government bonds
Standard and Poor's composite index
Portfolio of common stocks of small firms

2. The risk that cannot be eliminated by diversification is called market risk. - true or false?

3. Safro Corporation has had returns of -5%, 15% and 20% for the past three years. Calculate the standard deviation of the returns. (hint: assume this is a sample of the population).

4. Risk premium is the difference between the security return and the treasury bill return. - true or false?

5. If the price of two stocks move together what would be positve / negative?

6. The market risk premium is:

7. The variance or standard deviation is a measure of:

8. As the number of stocks in a portfolio is increase, what happens?
Choose one
Unique risk decreases and approaches to zero
Market risk decrease
Unique risk decreases and becomes equal to market risk
Total risk approaches to zero

9. The risk premium for Treasury bills is always equal to:

10. For a two-stock portfolio, the maximum reduction in risk occurs when the correlation coefficient between the two stocks is:

11. If two investments offer the same expected return, most investors would prefer the one with higher variance. - true or false?

12. What is the arithmetic average return of bonds earning 5%, stocks earning 11% and treasuries earning 2%?

[tripods68]

Is this your final exam...! Yo' busted

[pearlieq]

1.) Teddy Roosevelt

2.) Kinetic energy

3.) Marsupial

4.) 23/5

5.) 1853

6.) False

7.) Cubism

8.) The Treaty of Ghent

9.) -i

10.) Jonas Salk

11.) Andante

12.) Monopsony

[Joan.of.the.Arch]

PearlieQ!

[Joan.of.the.Arch]

Hey, I just noticed I got promoted to Saving College Junior. I think it was this thread that did it. Too bad I didn't say anything smart.

[pearlieq]

Originally Posted by Joan.of.the.Arch

Hey, I just noticed I got promoted to Saving College Junior. I think it was this thread that did it. Too bad I didn't say anything smart.

That's so cool! I've been trying to figure out how the college counts go, because this has been the longest freshman year I've ever had!

[jIM_Ohio]

Originally Posted by dovix85

I am working on compiling all the answers to over 1000 of these questions in order to create a study guide. Any help would be appreciated: I will break them into a few parts.

1. Which of the following portfolios have the least risk?

A portfolio of treasury bills
A portfolio of long-term United States Government bonds
Standard and Poor's composite index
Portfolio of common stocks of small firms

define risk? Market risk, inflation risk or other.

Originally Posted by dovix85

2. The risk that cannot be eliminated by diversification is called market risk. - true or false?

false

Originally Posted by dovix85

3. Safro Corporation has had returns of -5%, 15% and 20% for the past three years. Calculate the standard deviation of the returns. (hint: assume this is a sample of the population).

why?

Originally Posted by dovix85

4. Risk premium is the difference between the security return and the treasury bill return. - true or false?

true

Originally Posted by dovix85

5. If the price of two stocks move together what would be positve / negative?

if return was positive, positive, if return was negative, negative

Originally Posted by dovix85

6. The market risk premium is:

something

Originally Posted by dovix85

7. The variance or standard deviation is a measure of:

changes in outcome from the average

Originally Posted by dovix85

8. As the number of stocks in a portfolio is increase, what happens?
Choose one
Unique risk decreases and approaches to zero
Market risk decrease
Unique risk decreases and becomes equal to market risk
Total risk approaches to zero

I have more money

Originally Posted by dovix85

9. The risk premium for Treasury bills is always equal to:

something. If you multiply both sides by zero, then it's zero.

Originally Posted by dovix85

10. For a two-stock portfolio, the maximum reduction in risk occurs when the correlation coefficient between the two stocks is:

zero or infinity, I forget

Originally Posted by dovix85

11. If two investments offer the same expected return, most investors would prefer the one with higher variance. - true or false?

false

Originally Posted by dovix85

12. What is the arithmetic average return of bonds earning 5%, stocks earning 11% and treasuries earning 2%?

depends on how much is allocated to each sector