Reference no: EM131854145
When did the birth of modern risk management develop?
During Renaissance times when thinkers like Pascal and Fermat invented probability theory while solving an intellectual puzzle.
When Greeks threw dice in ancient times.
By Einstein, just after he developed the general theory of relativity.
In the late-1980s, following the collapse of many Texas banks.
By the Romans around 200 BC, to account for the chances of attacking armies succeeding.
Which of the following are examples of event risk?
natural disasters
stock market declines
political upheavals
both a. and c.
none of the above
What does a "smart investor" focus on?
Maximizing returns.
Minimizing risk.
Opportunities that are attractive given their risk characteristics.
Opportunities that maximize risk and reduce expected returns.
Opportunities that avoid risk completely.
What was the biggest one-day percentage drop in the S&P 500 during 1999?
-3.5 %
-23.9 %
-4.4 %
-12.2 %
- 13.8 %
According to the course, most mutual funds ___.
convey their proclivity for assuming risk with only generic labels
accurately describe their risk/return characteristics
are required by law to disclose the variance of ruturns
are required by law to not discuss the risks of their investments
offer excellent risk/return characteristics
What type of risk can be diversified away in a portfolio?
Unique risk (company specific)
Systematic risk
Market risk
Economic factor risk
Political risk
What does this course say about risk and age?
Some claim that we are born with a certain risk tolerance level, but our appetite for risk tends to diminish as we grow older.
Some claim that we are born with a certain risk tolerance level, but then our appetite for risk tends to increase as we grow older.
The course shows that there is no relation between risk tolerance and age.
Which of the following is NOT a potential subcomponent of market risk?
equity risk
interest rate risk
currency risk
commodity risk
option risk
What is the purpose of stress testing?
To help predict the occasional, unexpected crises that result in extreme market shocks
To determine when your portfolio will do best
To develop signals to enter and exit the market
To chart past performance
To determine how well you handle your portfolio risk
To start managing your risk you first need to define a target risk level that is consistent with your ___.
goals
capacity for taking risk
risk tolerance
None of these are correct
All of the above are correct