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Diversification cannot reduce market risk.

A) True
B) False

Correct Answer

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ZZL Corporation has the opportunity to undertake an investment project that will cost $20,000 today.If the interest rate is 20 percent and if the project will yield the company $30,000 in 3 years,then ZZL will undertake the project.

A) True
B) False

Correct Answer

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verified

From the standpoint of the economy as a whole,the role of insurance is to greatly reduce or eliminate the risks inherent in life.

A) True
B) False

Correct Answer

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verified

Studies find that mutual fund managers who do well in one year are likely to do well the next year.

A) True
B) False

Correct Answer

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Managed mutual funds usually outperform mutual funds that are supposed to follow some stock index.

A) True
B) False

Correct Answer

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verified

Actively managed mutual funds usually fail to outperform index funds,and this fact provides evidence in favor of the efficient markets hypothesis.

A) True
B) False

Correct Answer

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verified

Available evidence indicates that stock prices,even if not exactly a random walk,are very close to a random walk.

A) True
B) False

Correct Answer

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verified

A company that can build a project that will cost $50,000,but returns $52,000 in one year would make a good decision by turning this project down if the interest rate were 3 percent.

A) True
B) False

Correct Answer

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verified

If you wish to rely on fundamental analysis to choose a portfolio of stocks,then you have no choice but to do all the necessary research yourself.

A) True
B) False

Correct Answer

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Risk-averse individuals like good things more than they dislike comparable bad things.

A) True
B) False

Correct Answer

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verified

The value of a stock depends on the ability of the company to generate dividends and the expected price of the stock when the stockholder sells her shares.

A) True
B) False

Correct Answer

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verified

According to the efficient markets hypothesis,the number of people who think a stock is overvalued exactly balances the number of people who think a stock is undervalued.

A) True
B) False

Correct Answer

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verified

The fact that we observe a trade-off between risk and return is puzzling to economists,because that observation conflicts with the notion that most people are risk averse.

A) True
B) False

Correct Answer

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Moral hazard is illustrated by people who take greater risks after they purchase insurance.

A) True
B) False

Correct Answer

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A person with diminishing marginal utility of wealth is risk averse.

A) True
B) False

Correct Answer

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verified

Because the statistic called the standard deviation measures the volatility of a variable,it is used to measure the return of a portfolio.

A) True
B) False

Correct Answer

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Adverse selection is illustrated by people who take greater risks after they purchase insurance.

A) True
B) False

Correct Answer

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verified

The present value of a payment of $500 to be made two years from today is greater if the interest rate is 7% than if it is 6%.

A) True
B) False

Correct Answer

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verified

People who are risk averse dislike bad outcomes more than they like comparable good outcomes.

A) True
B) False

Correct Answer

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verified

Diversification can reduce firm-specific risk.

A) True
B) False

Correct Answer

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verified

Showing 21 - 40 of 54

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