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1.
The lower the risk of an investment, the higher its expected return.
Choose wisely. There is only one correct answer.
False. The lower the risk of an investment, the lower its expected return. To get high returns, you must accept greater risk.
2.
A security with a high coefficient of variation is highly volatile.
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True. A security with a high coefficient of variation is highly volatile.
3.
If a security is more volatile than the market, it has a beta _______.
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Greater than 1. A beta greater than 1 indicates that a stock is more volatile than the overall market.
4.
Your risk tolerance depends on your investment goals.
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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 has a high standard deviation, its volatility is low.
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False. If a security has a high standard deviation, its volatility is high.