Multiple choice

1) For investors, the proper measure of a stock's risk is its __________.

A. non diversifiable risk 

B. specific risk 

C. nonsystematic risk 

D. standard deviation 

2) A company’s beta is -1.5. If the overall stock market decreases by 5%, what is the expected change in the firm's stock price?

A. Share price decreases by 5% 

B. Share price decreases by 6.5% 

C. Share price increases by 7.5% 

D. Share price decreases by 7.5% 

3) Which of these investments would you expect to have the highest rate of return for the next 20 years?

A. U.S. Treasury bills 

B. Long-term corporate bonds 

C. Intermediate-term U.S. government bonds 

D. Money market funds 

4) Dimensions of risk include __________.

A. uncertainty about the future outcome 

B. the certainty of a negative outcome 

C. the impossibility of the same return 

D. uncertainty about yesterday’s outcome