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1.
The degree to which a securitys price moves up and down is known as its volatility.
True. Volatility refers to how much the price fluctuates.
2.
The problem with standard deviation is that it is difficult to interpret by itself.
True. That is why the coefficient of variation is used.
3.
Which of the following does the Capital Asset Pricing Model assume?
Investors expect rewards for accepting an investments risk. The CAPM assumes that investors expect to be compensated for risk.
4.
Your risk tolerance depends on your investment goals.
True. Different investment goals require that you tolerate different levels of risk. For example, if you want to make a killing in the market overnight, you may need to have a very high tolerance for risk.
5.
If a security is more volatile than the market, it has a beta _______.
Greater than 1. A beta greater than 1 indicates that a stock is more volatile than the overall market.