WorksheetsRisk and Return
Total questions: 15
Worksheet time: 38mins
Which of the following is an example of systematic risk?
BHP Billiton posts lower than expected earnings.
Woolworths announces record earnings.
The government raises interest rates unexpectedly.
Coca-Cola announces higher than expected earnings
Consider the following 4 assets. If you have to select only one, which one would you pick if you are risk-averse?
D
A
B
C
Standard deviation is a relative measure of risk.
Market risk can be reduced through diversification.
Risk is the chance that the actual return deviate from the expected return.
Ahmad is considering investing in stocks. Which is the less risky investment?
Stock A: SD = 10%; E(R) = 10%
Stock B: SD = 6%; E(R) = 10%
Stock C: SD = 8%; E(R) = 12%
Stock D: SD = 20%; E(R) = 24%
Probability = 15%; Return = -5%
Probability = 20%; Return = 10%
Probability = 30%; Return = 15%
Probability = 35%; Return = 25%
What is the expected rate of return on the investment?
15.4%
14.5%
15.5%
16%
A savings account is considered a risk-free investment,
True
False
A portion of a corporation's profit distributed to stockholders is called a(n)
interest payment
gain on principal
return on investment
dividend
If employees of a company go on strike, this is an example of which types of investment risk?
company risk
industry risk
political risk
inflation risk
Our government recently signed a bill to impose $50 billion in tariffs on China, this is an example of which types of investment risk?
company risk
industry risk
political risk
inflation risk
Gambling is also called
risk-free investing
game of chance
tax-free investment
Below are all types of return except:
Actual return
Expected return
Possible return
Required return
Write the formula to calculate the total return?
