#1
Which of the following measures the total risk of a security within a diversified portfolio?
Systematic risk
Unsystematic risk
Beta
Standard deviation
#2
The Capital Asset Pricing Model (CAPM) is used to determine:
Expected return on a security
Total risk of a security
Systematic risk of a security
Unsystematic risk of a security
#3
What does the term 'beta' represent in portfolio management?
The measure of a security's volatility in relation to the market
The expected return on a security
The total risk of a security
The measure of a security's unsystematic risk
#4
Which of the following is NOT a type of risk in portfolio management?
Market risk
Credit risk
Operational risk
Dividend risk
#5
What is the primary objective of portfolio diversification?
To increase risk
To decrease risk
To increase return
To decrease return
#6
Which of the following is a measure of systematic risk?
Alpha
Beta
R-squared
Standard deviation
#7
Which of the following statements is true regarding the risk-return relationship?
Higher risk always results in higher returns
Lower risk always results in higher returns
Higher risk may result in higher returns, but it also increases the chance of losses
Lower risk may result in higher returns, but it also decreases the chance of gains
#8
The Sharpe ratio measures the relationship between:
Total risk and systematic risk
Risk-free rate and total risk
Expected return and total risk
Excess return and total risk
#9
What is the term used to describe the reduction of risk achieved by combining different assets in a portfolio?
Diversification
Consolidation
Aggregation
Integration
#10
Which of the following is NOT a component of the Modern Portfolio Theory (MPT)?
Risk-free rate
Efficient frontier
Expected return
Arbitrage pricing
#11
The term 'alpha' in portfolio management refers to:
The measure of a security's volatility in relation to the market
The expected return on a security
The excess return of a security relative to its expected return based on its risk
The measure of a security's unsystematic risk
#12
Which of the following statements best describes the concept of risk-adjusted return?
It is the return earned on an investment in relation to the overall market return
It is the return earned on an investment adjusted for its level of risk
It is the return earned on an investment adjusted for inflation
It is the return earned on an investment adjusted for taxes
#13
Which of the following is NOT a factor affecting the risk of a security?
Interest rate fluctuations
Company-specific events
Market risk
Inflation rate
#14
The Treynor ratio measures the relationship between a security's excess return and its:
Total risk
Unsystematic risk
Market risk premium
Risk-free rate
#15
What is the term used to describe the extent to which two assets move in relation to each other?
Correlation
Covariance
Regression
Standard deviation
#16
What does the Sharpe ratio measure in portfolio management?
The ratio of total return to systematic risk
The ratio of excess return to total risk
The ratio of excess return to unsystematic risk
The ratio of expected return to market risk
#17
Which of the following statements best describes the concept of a 'black swan' event?
An unpredictable event with extreme consequences
An event that occurs frequently in financial markets
An event that can be accurately forecasted using historical data
An event that has no impact on financial markets