#1
Which of the following is a measure of investment risk?
Standard deviation
ExplanationQuantifies the dispersion of investment returns.
#2
What does the term 'diversification' refer to in investment?
Spreading investments across various assets
ExplanationReduces risk by not putting all eggs in one basket.
#3
What is 'standard deviation' in the context of investment?
Measure of dispersion of investment returns
ExplanationShows how much returns deviate from their average.
#4
Which of the following is a characteristic of a 'bull market'?
Positive investor sentiment and rising stock prices
ExplanationMarket on an upward trend.
#5
What is the primary goal of portfolio diversification?
Minimize risk
ExplanationReduce the impact of individual losses.
#6
Which of the following is NOT a type of investment risk?
Economic risk
ExplanationConcerns broader economic factors.
#7
Which of the following is NOT typically considered a measure of investment return?
Price-to-earnings ratio
ExplanationA valuation metric, not a return measure.
#8
Beta coefficient is a measure of:
Market risk
ExplanationSensitivity of a stock's returns to market movements.
#9
What does the 'efficient market hypothesis' suggest?
Stock prices reflect all available information
ExplanationPrices reflect all known and relevant information.
#10
What does 'alpha' represent in investment analysis?
Excess return compared to the market
ExplanationThe measure of a manager's performance.
#11
Which of the following is NOT a type of systematic risk?
Company-specific risk
ExplanationUnique to a particular company.
#12
What is the relationship between risk and return in investments?
Higher risk may lead to higher returns, but it also increases the chance of losses
ExplanationRisk and return are generally positively correlated.
#13
What is the formula for calculating the Sharpe ratio?
(Expected return - Risk-free rate) / Standard deviation of returns
ExplanationMeasures risk-adjusted return.
#14
Which of the following is a measure of downside risk?
Sortino ratio
ExplanationFocuses on negative returns, excluding upside volatility.
#15
What is the formula to calculate compound annual growth rate (CAGR)?
(Ending Value / Beginning Value) ^ (1 / Number of years) - 1
ExplanationMeasures growth rate over multiple periods.
#16
What is the formula for calculating the geometric mean return of an investment?
Product of (1 + each return)^(1 / Number of observations) - 1
ExplanationAverage rate of return over multiple periods.
#17
Which of the following is NOT a measure of investment performance?
Economic growth rate
ExplanationMacroeconomic indicator, not investment performance metric.