Answer Happy

1) Circle the correct response When investing in securities, risk means: A. certainty in future rates of return B. uncertainty in future rates of return C. the investor cannot lose money D. loss exposure that can be completely eliminated through diversification E. trading gains that are highly likely to occur 2) Circle the correct response In the utility calculation, a higher coefficient of risk aversion means: A. the investor is more risk averse B. the investor is less risk averse C. the investor is risk neutral D. the investor is a risk lover E. the investor is not likely to lose money 3) Circle the correct response Market risk: A. is equivalent to unique risk B. can be diversified away C. cannot be diversified away D. can be predicted with 100% accuracy E. is no longer a concern with investing 4) Circle the correct response Other things equal, diversification is most effective when A. securities' returns are uncorrelated B. securities' returns are positively correlated C. securities' returns are high D. securities' returns are negatively correlated E. securities' returns are positively correlated and high