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- Introduction to Corporate FinanceFinancial Statements,Taxes,and Cash FlowWorking With Financial StatementsLong-Term Financial Planning and GrowthIntroduction to Valuation: The Time Value of MoneyDiscounted Cash Flow ValuationInterest Rates and Bond ValuationStock ValuationNet Present Value and Other Investment CriteriaMaking Capital Investment DecisionsProject Analysis and EvaluationSome Lessons From Capital Market HistoryReturn,Risk,and the Security Market LineCost of CapitalRaising CapitalFinancial Leverage and Capital Structure PolicyDividends and Payout PolicyShort-Term Finance and PlanningCash and Liquidity ManagementCredit and Inventory ManagementInternational Corporate FinanceBehavioral Finance: Implications for Financial ManagementEnterprise Risk ManagementOptions and Corporate FinanceOption ValuationMergers and AcquisitionsLeasing

Question 1

Free

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arithmetic return

historical return

expected return

geometric return

required return

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Question 2

Free

Multiple Choice

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index

portfolio

collection

grouping

risk-free

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Question 3

Free

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portfolio return

portfolio weight

degree of risk

price-earnings ratio

index value

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Question 4

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unsystematic

diversifiable

systematic

asset-specific

total

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Question 5

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portfolio

nondiversifiable

market

unsystematic

total

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Question 6

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concentrating an investment in two or three large stocks will eliminate all of the unsystematic risk.

concentrating an investment in three companies all within the same industry will greatly reduce the systematic risk.

spreading an investment across five diverse companies will not lower the total risk.

spreading an investment across many diverse assets will eliminate all of the systematic risk.

spreading an investment across many diverse assets will eliminate some of the total risk.

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Question 7

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efficient markets hypothesis

systematic risk principle

open markets theorem

law of one price

principle of diversification

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Question 8

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beta

reward-to-risk ratio

risk ratio

standard deviation

price-earnings ratio

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Question 9

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reward-to-risk matrix

portfolio weight graph

normal distribution

security market line

market real returns

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Question 10

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reward-to-risk ratio

market standard deviation

beta coefficient

risk-free interest rate

market risk premium

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Question 11

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capital asset pricing model

time value of money equation

unsystematic risk equation

market performance equation

expected risk formula

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Question 12

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average arithmetic return.

expected return.

market rate of return.

internal rate of return.

cost of capital.

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Question 13

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highest expected return given any economic state.

arithmetic average of the returns for each economic state.

summation of the individual expected rates of return.

weighted average of the returns for each economic state.

return for the economic state with the highest probability of occurrence.

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Question 14

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guaranteed to equal the actual average return on the stock for the next five years.

guaranteed to be the minimal rate of return on the stock over the next two years.

guaranteed to equal the actual return for the immediate twelve month period.

a mathematical expectation based on a weighted average and not an actual anticipated outcome.

the actual return you should anticipate as long as the economic forecast remains constant.

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Question 15

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expected market rate of return.

risk-free rate.

inflation rate.

standard deviation.

variance.

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Question 16

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total

nondiversifiable

unsystematic

systematic

economic

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Question 17

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number of shares owned of each stock.

market price per share of each stock.

market value of the investment in each stock.

original amount invested in each stock.

cost per share of each stock held.

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Question 18

Multiple Choice

I)percentage of the portfolio invested in each individual security

II)projected states of the economy

III)the performance of each security given various economic states

IV)probability of occurrence for each state of the economy

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I and III only

II and IV only

I, III, and IV only

II, III, and IV only

I, II, III, and IV

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Question 19

Multiple Choice

I)can never exceed the expected return of the best performing security in the portfolio.

II)must be equal to or greater than the expected return of the worst performing security in the portfolio.

III)is independent of the unsystematic risks of the individual securities held in the portfolio.

IV)is independent of the allocation of the portfolio amongst individual securities.

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I and III only

II and IV only

I and II only

I, II, and III only

I, II, III, and IV

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Question 20

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will equal the variance of the most volatile stock in the portfolio.

may be less than the variance of the least risky stock in the portfolio.

must be equal to or greater than the variance of the least risky stock in the portfolio.

will be a weighted average of the variances of the individual securities in the portfolio.

will be an arithmetic average of the variances of the individual securities in the portfolio.

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