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    Test Bank For Portfolio Construction Management and Protection 5th Edition Strong

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    JasonRiceaqnbd
    This document is a test bank for Chapter Six from the textbook "Portfolio Construction Management and Protection, 5th Edition: Strong". It contains 17 multiple choice questions testing concepts from the chapter, including the benefits of diversification, the efficient frontier, the capital market line, beta, and the security market line. The questions cover topics such as the definition of the efficient set, characteristics of efficient portfolios, the impact of a risk-free rate on the efficient frontier, and how beta is calculated.

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    © All Rights Reserved
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    Test Bank For Portfolio Construction Management and Protection 5th Edition Strong

    Uploaded by

    JasonRiceaqnbd
    148 views4 pages
    This document is a test bank for Chapter Six from the textbook "Portfolio Construction Management and Protection, 5th Edition: Strong". It contains 17 multiple choice questions testing concepts from the chapter, including the benefits of diversification, the efficient frontier, the capital market line, beta, and the security market line. The questions cover topics such as the definition of the efficient set, characteristics of efficient portfolios, the impact of a risk-free rate on the efficient frontier, and how beta is calculated.

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    Test Bank

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    Test Bank for Portfolio Construction Management and Protection 5th Edition Strong

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    This document is a test bank for Chapter Six from the textbook "Portfolio Construction Management and Protection, 5th Edition: Strong". It contains 17 multiple choice questions testing concepts from the chapter, including the benefits of diversification, the efficient frontier, the capital market line, beta, and the security market line. The questions cover topics such as the definition of the efficient set, characteristics of efficient portfolios, the impact of a risk-free rate on the efficient frontier, and how beta is calculated.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    148 views4 pages

    Test Bank For Portfolio Construction Management and Protection 5th Edition Strong

    Uploaded by

    JasonRiceaqnbd
    This document is a test bank for Chapter Six from the textbook "Portfolio Construction Management and Protection, 5th Edition: Strong". It contains 17 multiple choice questions testing concepts from the chapter, including the benefits of diversification, the efficient frontier, the capital market line, beta, and the security market line. The questions cover topics such as the definition of the efficient set, characteristics of efficient portfolios, the impact of a risk-free rate on the efficient frontier, and how beta is calculated.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 4

    Test Bank for Portfolio Construction Management and Protection, 5th Edition: Strong

    Test Bank for Portfolio Construction Management


    and Protection, 5th Edition: Strong

    To download the complete and accurate content document, go to:


    https://testbankbell.com/download/test-bank-for-portfolio-construction-management-a
    nd-protection-5th-edition-strong/

    Visit TestBankBell.com to get complete for all chapters


    Chapter Six Test Bank

    Chapter Six

    Why Diversification is a Good Idea

    A 1. Risk averse people only take risks when


    a. they believe they will be rewarded for doing so
    b. they have to
    c. it is necessary to guarantee an additional realized return
    d. actual returns are below expected return

    C 2. The collection of eligible investments is called the


    a. eligible set
    b. efficient set
    c. security universe
    d. principal components

    C 3. A security dominates another if


    a. it offers the same expected return with less risk
    b. it offers higher expected return for the same risk
    c. both a and b
    d. none of the above

    B 4. In the absence of a riskfree rate, the minimum variance portfolio


    a. is usually efficient
    b. is always efficient
    c. is never efficient
    d. is usually the optimal portfolio

    A 5. Portfolios that are not dominated


    a. lie on the efficient frontier
    b. are minimum risk portfolios
    c. have maximum expected returns
    d. have low correlations

    A 6. With the availability of a riskfree rate, the efficient frontier becomes


    a. linear
    b. curved
    c. shaped like a letter S
    d. less attractive by moving down and to the right

    175
    Chapter Six Test Bank

    C 7. Portfolios _____ do not exist.


    a. at the far right of the efficient frontier
    b. at the far left of the efficient frontier
    c. above the efficient frontier
    d. below the efficient frontier

    A 8. The line passing through the risk free rate and the market portfolio is called the
    a. market line
    b. optimum combination line
    c. dominant line
    d. unlevered investment line

    C 9. According to the separation theorem, all investors should hold


    a. as many securities as possible
    b. as many uncorrelated securities as possible
    c. only the risk-free rate and the market portfolio
    d. only two risky portfolios on the efficient frontier

    D 10. Efficient portfolios to the left of the market portfolio are called
    a. borrowing portfolios
    b. fully invested portfolios
    c. dominant portfolios
    d. lending portfolios

    A 11. Most computer output of efficient portfolios lists only the


    a. corner portfolios
    b. odd-numbered portfolios
    c. low variance portfolios
    d. maximum return portfolios

    D 12. The Markowitz algorithm is an application of


    a. linear programming
    b. goal programming
    c. integer programming
    d. quadratic programming

    C 13. What is the beta of the risk-free asset?


    a. –1.0
    b. –0.5
    c. 0
    d. 1.0

    176
    Test Bank for Portfolio Construction Management and Protection, 5th Edition: Strong

    Chapter Six Test Bank

    B 14. The value of a negative beta asset is


    a. the higher expected return of this asset
    b. the risk reducing properties when added to a portfolio
    c. that it is a necessary component to have a fully diversified portfolio
    d. non-existent because negative beta assets are theoretically impossible

    C 15. The Security Market Line relates expected return to


    a. standard deviation
    b. variance
    c. beta
    d. there is no relationship of the SML with expected returns

    B 16. The Security Market Line is a


    a. curved line which passes through the risk-free rate and the Market
    portfolio
    b. straight line which passes through the risk-free rate and the Market
    portfolio
    c. line which dominates all assets except those on the efficient frontier
    d. line tangent to the efficient frontier

    A 17. Beta is usually calculated using the


    a. market model
    b. SML
    c. CML
    d. security variances

    177

    Visit TestBankBell.com to get complete for all chapters

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