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72. In general, which stocks should be combined into a portfolio if the goal is the greatest
reduction possible in overall portfolio risk?
73. Which one of the following concerns is likely to be most important to portfolio investors
seeking diversification?
74. A stock investor owns a diversified portfolio of 15 stocks. What will be the most likely
effect on the portfolio's standard deviation if one more stock is added?
75. Most of the beneficial effects of diversification will have been received by the time a
portfolio of common stocks contains approximately _____ stocks.
76. Risk factors that are expected to affect only a specific firm are referred to as:
77. Which one of the following risk types can be most eliminated by adding stocks to a
portfolio?
78. Which one of the following risks is most important to a well-diversified investor in
common stocks?
79. Which one of the following risks would be classified as a unique risk for an auto
manufacturer?
80. Which statement is correct concerning macro risk exposure?
81. Although unique risk is present in differing amounts, individual stocks are:
82. Which one of these is a specific risk?
83. Which one of the following statements is
incorrect
concerning stock indexes?
84. Historically, periods of market declines:
85. The fact that historical returns on Treasury bills are less volatile than common stock
returns indicates that:
86. Assume when a coin is tossed the observance of a head rewards you with a dollar and
the observance of a tail costs you fifty cents. How much would you expect to gain after 20
tosses?
87. A project's expected return is 15%, which represents a 35% return in a booming economy
and a 5% return in a stagnant economy. What is the probability of a booming economy occurring
if these are the only two economic states?
88. What percentage return is achieved by an investor who purchases a stock for $30,
receives a $1.50 dividend, and sells the share one year later for $28.50?
89. A portfolio is comprised of 60% of Stock A and 40% of Stock B.
What is the expected return of the portfolio?
90. Which one of the following companies is most apt to be exposed to the least amount of
macro risk?
91. A common stock was held for 2 years during which time total dividends of $20 were paid.
The stock was sold for $100. What was the purchase price of the stock if the total rate of return
for the period was 32%?
92. Which one of the following would you expect to represent the broadest-based index of
U.S. stocks?
93. Treasury bonds have provided a higher historical return than Treasury bills, which can be
attributed to their:
94. Averaging the deviations from the mean for a portfolio of securities will:
