1) Which of the following portfolios would be most appropriate for a moderately aggressive investor with an intermediate-term time horizon?
A) 50% money market securities; 5% real estate; 45% precious metals
B) 40% money market securities; 10% real estate; 50% foreign securities
C) 90% small-cap domestic equity securities; 10% collectibles
D) 30% domestic equity securities; 30% fixed-income domestic securities; 20% real estate; 20% foreign securities
2) Which of the following definitions of return is false?
A) Expected return
B) Realized return
C) Required return
D) Anticipated return
3) Which of the following definitions of investor returns is false?
A) Can be decided for a given level or risk
B) Can be determined by using “classical” statistical analysis
C) Have an investment outcome with the lowest expected risk
D) Are not based on capital appreciation
4) What is the objective of calculating the standard deviation of an investment portfolio?
A) Achieve an overall standard deviation that is lower than its component parts
B) Used for analysis of investment averages
C) Employed to verify the geometric average
D) Implemented to determine each stock’s beta
5) Proponents of CAPM have concluded that all of the following are correct EXCEPT one:
A) CAPM determines the equilibrium
B) CAPM is capbalble of eliminating unsystematic risk
C) CAPM can be used for the mean rate of return for any investments using its beta value
D) CAPM can be used for multiple-period plans