Example of systematic risk-according to markowitz risk

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Reference no: EM131312601

1) Which of the following risks confronting ABC Worldwide, Inc. is an example of a systematic risk?

A. A possible decline in the value of its holdings of short-term securities due to fluctuation in interest rates

B. A possible decline in its earnings due to a strike by its employees

C. A possible decline in the purchasing power of its net income due to inflations

D. A possible decline in its net worth due to the need to reinvest funds from an investment at a lower rate than was earned initially

2) According to Markowitz risk can be:

A. Minimized and eliminated

B. Eliminated without compromizing the overall returns

C. Minimized by selecting an optimum combination of investments

D. Analyzed exclusively

3) Which of the following statement(s) concerning beta coefficients is (are) correct?

1. Investors who tend to be risk averse should have a portfolio made up mostly of high-beta-coefficient securities.

2.. Beta coefficients of particular securities change over time

3.. Beta coefficients are constructed based on past data

A. (1) only

B. (1) and (3) only

C. (1) and (2) only

D. (2) and (3) only

4) Unsystematic risk is also know as:

I. Industry risk

II. Specific risk

III. Undiversifiable risk

IV. Residual risk

A. I, II, III

B. I, III, IV

C. I, II, IV

D. I, II, III, IV

Reference no: EM131312601

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