Answer 17) Smart beta alternatively-constructed indices aim to take advantage of inefficiencies of actual market indices and market abnormalities.
True statement is Option B.
Answer 18) OPtion E : prospectus
A prospectus is combination of all required information, used by investors to take informed investment decision.
Answer 19) In four factor model one additional factor of momentum has been added , which is specific for asset class.
Option C
Answer 20) well diversified portfolio has zero unsystematic risk .
Option B
17. Which of the following statements is true about "Smart Beta" strategies A. They are an...
Which of the following statements about risk measures is correct? a. Beta is a measure of systematic risk, whereas standard deviation is the measure of total risk. b. Beta is a measure of total risk, whereas standard deviation is the measure of unsystematic risk. c. Beta is a measure of total risk, whereas standard deviation is the measure of systematic risk. d. Beta is a measure of total risk, whereas Standard deviation is the measure of systematic risk. e. Beta...
Which of the following is statements is TRUE? Beta is a measure of unsystematic risk ) A beta of 1 implies the asset has the same unsystematic risk as the overall market. A beta > 1 implies the asset has more systematic risk than the overall market. A beta < 1 implies the asset has more systematic risk than the overall market.
Which of these statements (or sets of statements) are true about the equity beta? A. It is a measure of systematic risk. B. It measures both systematic financial and systematic business risk. C. Increasing debt in the capital structure increases the equity beta. D. A, B, and C are all true E. Only A and B
Question 10 Which of the following is true about the degree of operating leverage? Operating leverage is higher if fixed operating costs are high relative to variable operating costs Higher operating leverage increases the sensitivity of operating income to changes in sales Operating leverage magnifies both profits and losses, helping in the good times and causing pain in the bad times All of the above Question 12 What does the beta measure? unsystematic risk. systematic risk diversifiable risk company-specific risk Question 14 Why do we use Capital Asset Pricing Model (CAPM)? because it is...
Are the following statements true? Statement 1: The Fama and French evidence that high book-to-market firms outperform low book-to-market firms even after adjusting for beta means that either high book-to-market firms are underpriced or the book-to-market ratio is a proxy for a systematic risk factor. Statement 2: Assume that a company announces unexpectedly high earnings in a particular quarter. In an efficient market one might expect an abnormal price change immediately after the announcement. A. Yes. B. No. Both are...
Which of the following statement is not true? (extra credit) a. Any change in its beta is likely to affect the required rate of return on a stock, which implies that a change in beta will likely have an impact on the stock's price, other things held constant. b. The slope of the SML is determined by investors' aversion to risk. The greater the average investor's risk aversion, the steeper the SML. c. A firm can change its beta through managerial decisions, including...
Which of the following statements is CORRECT? a. If a project has normal cash flows, then its IRR must be positive. b. If a project has normal cash flows, then its MIRR must be positive. c. If a project has normal cash flows, then it can have two NPVs. d. If a project has normal cash flows, then it can have two IRRs. e. If a project has normal cash flows, then it cannot have two IRRs. vi. Which of...
Question 22 10 points Which of the following statements is FALSE? In theory, the market portfolio includes all risky assets that are available to investors. The beta of the market portfolio is 1. Beta measures the sensitivity of a security to systematic risk factors. p. If we assume that the market portfolio (or the S&P 500) is efficient, then changes in the value of the market portfolio represent systematic shocks to the economy. E. None of the above
Which statement is TRUE? a) All of these statements are false b) The measure of risk for a security held in a diversified portfolio is standard deviation c) As more stocks are added to a portfolio, total risk is expected to fall but at an increasing rate. So if one were to invest in enough stocks, total risk could be eliminated. d) Diversification reduces the portfolio’s expected return because it reduces the portfolio’s total risk e) Proper diversification can reduce...
Which of the following statements is true? A. A stock with a beta less than 1.0 has lower nondiversifiable risk than a stock with a beta of 1.0. B. A stock with a beta greater than 1.0 has lower nondiversifiable risk than a stock with a beta of 1.0. C. A stock with a beta less than zero has no exposure to systematic risk. D. A stock with a beta less than 1.0 has higher nondiversifiable risk than a stock...