HI5002 QUIZ

Lecture 4: Market Efficiency, Risk-Return and Portfolio Evaluation

1. _______________________________ refers to the outcome of an investment opportunity.

2. ________________________________________ is used to measure the risk of an investment
3. _____________________ is a collection of assets
4. The total risk of the portfolio can be reduced by_______________________, without lowering
the portfolio’s expected rate of return
5. ________________________________ assumes that investors choose to hold the optimally
diversified portfolio that includes all risky investments.
6. The rate of return on an investment can be positive or negative True / False
7. Investors have historically earned higher rates of return on riskier investments True / False
8. The historical returns of the higher-risk investment classes have lower SD. True / False
9. Both arithmetic and geometric average are important and correct True / False
10. According to the efficient markets hypothesis, a strategy of shifting one’s portfolio in response to
public information, such as changes in oil prices, will not result in higher expected returns.
True / False