Stock and Company

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Week 7 Chapter 6: Investors in the Share Market True/False QUESTIONS 1. Investing in shares of publicly listed corporations should, on average, over time provide a higher return than investing in fixed-interest securities. a. True b. False 2. Investments through a stock exchange are limited to ordinary shares issued by listed corporations. a. True b. False 3. Portfolio theory contends that a diversified share portfolio enables an investor to significantly reduce the portfolio’s exposure to systematic risk. a. True b. False 4. A share that has a beta of one is twice as risky as an average share listed on a stock market. a. True b. False 5. Shares that typically demonstrate a negative price correlation will usually move in the same direction…show more content…
Government: Commonwealth, state and government trading enterprises D. Overseas—the rest of the world 6. The risk that impacts specifically on the share price of a particular company is called: A. economic risk B. business risk C. systematic risk D. unsystematic risk 7. When investors buy and sell shares based on receiving new information on shares and markets, this is known as: A. active investment B. a diversified strategy C. a market replication strategy D. passive investment 8. To track the S&P500, a fund manager can buy: A. all the stocks in the S&P500 B. an S&P500 index fund C. a percentage of stocks that essentially tracks the index D. All of the given answers. 9. The correlation of pairs of securities within a portfolio is called: A. co-association B. correspondence C. covariance D. variance 10. The correlation between two shares: A. can take on positive values
MAF 702 Lecture 7 (Topic 7) MCQs and T/F Questions

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B. can take on negative values C. is related to the covariance of a share D. All of the given answers. 11. Portfolio risk is heavily based on: A. a simple average of the variance of the stocks in the portfolio B. a weighted average of the variance of the stocks in the portfolio C. a weighted average of the covariance of the stocks in the portfolio D. the standard deviation of the stocks 12. When an investor alters the mix of their portfolio to reflect market changes, this is called _____ asset allocation A. market timing B. passive
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