#1
Which of the following is NOT a type of financial risk?
Market risk
Credit risk
Operational risk
Liquidity risk
#2
What does CAPM stand for in finance?
Capital Asset Pricing Model
Cost Analysis and Performance Measurement
Cash Accounting and Portfolio Management
Credit Analysis and Profit Maximization
#3
What is the primary goal of portfolio management?
To maximize returns
To minimize risk
To achieve a balance between risk and return
To eliminate all risk
#4
Which of the following is a characteristic of diversification in portfolio management?
It increases total risk
It reduces total risk
It has no effect on total risk
It only affects systematic risk
#5
What is the concept of correlation in portfolio management?
It measures the relationship between two assets' returns
It measures the standard deviation of a portfolio
It measures the risk-free rate of return
It measures the expected return of a portfolio
#6
What does 'beta' represent in the context of financial risk?
A measure of market risk
A measure of liquidity risk
A measure of credit risk
A measure of operational risk
#7
What is the formula for calculating the standard deviation of a portfolio return?
∑(wi × σi)
∑(wi × (σi)^2)
∑(wi × (σi)^2) - ρij
∑(wi × (σi)^2) + ρij
#8
What is the formula for calculating the expected return of a portfolio?
∑(wi × ri)
∑(wi × (ri)^2)
∑(wi × (ri)^2) - ρij
∑(wi × (ri)^2) + ρij
#9
In the context of portfolio management, what does the term 'alpha' represent?
Excess return relative to the market
Systematic risk
Unsystematic risk
Market return
#10
What is the primary purpose of Monte Carlo simulation in portfolio management?
To forecast future asset prices
To estimate portfolio risk and return
To calculate the standard deviation of a portfolio
To analyze market liquidity
#11
Which of the following is NOT a measure of portfolio risk?
Value at Risk (VaR)
Sharpe Ratio
Standard Deviation
Beta
#12
Which of the following is a limitation of the Capital Asset Pricing Model (CAPM)?
It assumes all investors have the same time horizon
It does not consider market risk
It does not account for unsystematic risk
It does not provide a risk-free rate
#13
Which of the following best describes the term 'portfolio optimization'?
Minimizing the return of a portfolio
Maximizing the standard deviation of a portfolio
Finding the best combination of assets to achieve a specific objective
Ignoring risk and focusing solely on returns
#14
What is the primary limitation of using historical data in portfolio management?
It does not account for future market conditions
It accurately predicts future returns and risks
It reflects all possible market scenarios
It eliminates the need for risk assessment
#15
What is the main objective of stress testing in portfolio management?
To identify the best-performing assets
To assess the impact of extreme market conditions on a portfolio
To determine the average return of a portfolio
To eliminate all portfolio risk