$01.$ The statement: "A portfolio is less than the sum of it's parts", means:

Select one:

a$.$ Portfolio returns will always be lower than the returns on individual stocks.

b$.$ For reasons that are not well understood, the value of a portfolio is less than the sum of the values of its components.

c$.$ It is less expensive to buy a group of assets than to buy those assets individually.

d$.$ A diversified group of assets will be less volatile than the individual assets within the group

$02.$ Even using a diversified portfolio of assets, there is a minimum level of risk that cannot be diversified away, which is:

Select one:

a$.$ Systematic risk

b$.$ Total risk

c$.$ Equity risk

d$.$ Unsystematic risk

$01.$ The systematic risk principle states that the expected return on a risky asset depends only:

Select one:

a$.$ On the asset's unsystematic risk, because that is idiosyncratic risk

b$.$ On the asset's total risk, as measured by Standard Deviation

c$.$ On the P$/$E ratio & market capitalisation of ach asset.

d$.$ On the asset's systematic risk, as measured by Beta

$02.$ Share A has a beta of $1\mathrm{.}2$ and Share B has a beta of $0\mathrm{.}9,$ therefore it is valid to believe:

Select one:

a$.$ Share A will have lesser expected returns than Share B

b$.$ Share A & Share B should provide the same risk$-$return profile, as they are both traded on the ASX

c$.$ Share B will have greater risk than Share A

d$.$ Share A has greater systematic risks and therefore will have a greater expected return than Share B$.$

$05.$ Share XYZ has a Beta of $1\mathrm{.}3.$ The current Market risk premium is $8\%,$ and the current Risk$-$free rate is $2\%.$ The expected return for XYZ is:

Select one:

a$.9\mathrm{.}8\%$

b$.12\mathrm{.}4\%$

c$.10\mathrm{.}6\%$

d$.13\%$

$06.$ An efficient portfolio is described as$,$ a portfolio that:

Select one:

a$.$ Provides the highest return for the highest level of risk, following the risk$-$reward paradigm

b$.$ Provides the lowest return for the given lowest level of risk

c$.$ Is just a theory, as practically it is near impossible to achieve with the market risk$-$reward levels & asset choices

d$.$ Provides the highest return for a given level of risk, or has the lowest risk for a given level of return

$07.$ Diversification works because:

Select one:

a$.$ Assets that are less than perfectly correlated, tend to offset each other$$s movements, thus reducing the overall risk in a portfolio

b$.$ Assets that are negatively correlated, tend to move in the same direction, which increases portfolio returns for risk levels

c$.$ Assets that are perfectly positively correlated, tend to move together and accent each other's movements

d$.$ Assets with a correlation co$-$efficient of $+1$ will provide the lowest risk profile in the portfolio

$08.$ A lawsuit against Company PPP that can have far reaching effects across the industry it operates in and on the future, is an example of:

Select one:

a$.$ Portfolio risk, as Company PPP is an ASX$200$ share, and is held in most portfolios.

b$.$ Unsystematic risk

c$.$ Systematic risk

d$.$ Total risk to the industry

$09.$ Which of the following choices in regards of Beta is not correct:

Select one:

a$.$ The more responsive the price of a security is to changes in the market, the lower that security$\text{'}$s beta.

b$.$ Is a measure of non$-$diversifiable risk

c$.$ Indicates how the price of a security responds to market forces

d$.$ Found by relating the historical returns for a security to historical market returns

$10.$ Shares can have positive or negative betas. Share K is more risky & has a higher return than the market; so which choice below would best represent Share K$\text{'}$s Beta:

Select one:

a$.1\mathrm{.}4$

b$.1\mathrm{.}0$

c$.0\mathrm{.}8$

d$.-1\mathrm{.}3$

$11.$ In regards of the Capital Asset Pricing Model $($CAPM$),$ which of the below statements is not true:

Select one:

a$.$ Uses a market risk premium or market return to indicate the required return on an investment

b$.$ Uses beta and the risk$-$free rate

c$.$ Can be viewed both as an equation and as a graph

d$.$ It has several positives, but it cannot formally link the notions of risk & return

$12.$ Which of the following statements below, is not correct in regards of the "Efficient Frontier":

Select one:

a$.$ All portfolios on the efficient frontier are preferable to all other portfolios in the attainable set

b$.$ It is the leftmost boundary of the feasible $($Attainable$)$ set of portfolios that includes all efficient portfolios

c$.$ An efficient portfolio provides the best attainable trade$-$off between risk & return

d$.$ Has no connection to Modern Portfolio theory because portfolio betas & returns are different and need to be calculated in a different manner to individual shares & securities$.$