Home > Analysis > Intermediate
Analysis Intermediate: Evaluating Risk

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
If a stock has a beta of 2 and the market falls by 20 percent, the stock should _______.
Choose wisely. There is only one correct answer.
Fall by 40 percent. To calculate the rate at which a stock will fall, multiply the beta by the rate at which the market falls.
2.
A steep standard deviation curve means that _______.
Choose wisely. There is only one correct answer.
A securitys deviation is low. When the curve is steep, the deviation is small compared to the height of the curve.
3.
If you are willing to accept heavy losses in your portfolio to gain high returns later on, you are risk-averse.
Choose wisely. There is only one correct answer.
False. If you are willing to accept heavy losses in your portfolio to gain high returns later on, you have a high tolerance for risk.
4.
In the CAPM formula, Rf stands for _______.
Choose wisely. There is only one correct answer.
Risk-free return. In the CAPM formula, Rf stands for risk-free return.
5.
The problem with standard deviation is that it is difficult to interpret by itself.
Choose wisely. There is only one correct answer.
True. That is why the coefficient of variation is used.