QUESTION: 173

_________ is the uncertainty of future returns resulting from the sensitivity of the return on the subject investment to movements in the return on the investment market as a whole.

Unsystematic risk
Systematic risk
Equity-risk premium
Investment-specific risk

Answer(s): B

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QUESTION: 174

The fundamental of CAPM is:

That the risk premium portion of the expected return on a security is a function of that security's systematic risk.
That the risk premium portion of the expected return on a security is a function of that security's unsystematic risk.
That the risk discount portion of the expected return on a security is a function of that security's systematic risk.
That the risk discount portion of the expected return on a security is a function of that security's unsystematic risk.

Answer(s): A

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QUESTION: 175

Beta is a factor used to measure:

Systematic risk
Unsystematic risk
Impact of size effect on risk
Equity risk premium

Answer(s): A

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QUESTION: 176

It is possible (although not very common) for a security to have a negative beta (i.e. a beta less than zero). Such a beta would indicate that:

It is the result of aggressive securities
Betas for small and publicly traded companies are often unreliable
The returns of these securities are countercyclical to the returns of the board investment market index.
Risk-free return would be greater

Answer(s): C

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