兹维博迪金融学第二版试题库12TB

Chapter Twelve

Portfolio Opportunities and Choice

This chapter contains 30 multiple choice questions, 10 short problems, and 5 longer problems.

Multiple Choice

1. A person's wealth portfolio consists of all one’s ________ and ________.

(a)retained earnings; credit

(b)stocks; bonds

(c)assets; liabilities

(d)student loans; mortgages

Answer: (c)

2.The principle of diversification usually applies to all ________.

(a)risk averse people

(b)risk neutral people

(c)risk tolerant people

(d)b and c

Answer: (a)

3.Which of the following decisions can be considered part of portfolio selection?

(a)Whether to buy or rent one’s house

(b)What kind of life insurance to purchase

(c)Whether to invest in stocks or bonds

(d)All of the above

Answer: (d)

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4.An insurance policy that guarantees a person an income for as long as one lives is termed a ________.

(a)lump sum payment

(b)life annuity

(c)perpetual annuity

(d)life perpetuity

Answer: (b)

5.The ________ is the length of time between decisions to revise portfolios, whereas the ________ is

the total length of time for which one plans.

(a)trading horizon; decision horizon

(b)planning horizon; decision horizon

(c)decision horizon; trading horizon

(d)decision horizon; planning horizon

Answer: (d)

6.In making portfolio-selection decisions, people can in general achieve a ________ expected rate of

return by exposing themselves to ________ risk.

(a)higher; no

(b)higher; greater

(c)higher; lower

(d)lower; greater

Answer: (b)

7.The ________ the assets that make up the portfolio is found to be a very important factor when

considering the ability of diversification to reduce the riskiness of an investor's portfolio.

(a)expected return of

(b)variance of

(c)correlation among

(d)skewness among

Answer: (c)

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8.Risk tolerance can be influenced by which of the following characteristics?

(a)job status

(b)age

(c)wealth

(d)all of the above

Answer: (d)

9.The ________ is defined as a security that offers a perfectly predictable rate of return in terms of the

unit of account and the length of the investor's decision horizon.

(a)riskless asset

(b)risky asset

(c)30-day bond

(d)30-day debenture

Answer: (a)

10.A portfolio contains one risky asset and one riskless asset. The expected rate of return on the risky

asset is 0.13 and the riskless rate is 0.05. The standard deviation of the risky asset is 0.2, and the standard deviation of the portfolio is 0.075. What is the expected rate of return on the portfolio using the trade-off line?

(a)0.0490

(b)0.0800

(c)0.0980

(d)0.1175

Answer: (b)

11.An investor has a $100,000 investment to allocate between a risky asset and a riskless asset. The

equation for the trade-off line is determined to be E(r) = 0.05 + 0.09w. If the investor is requiring a portfolio composition corresponding to an expected rate of return of 0.11, how much should be invested in the risky asset?

(a)$18,181

(b)$33,333

(c)$66,667

(d)$81,819

Answer: (c)

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