1 .a The money market consists of:

a.Short-term debt securities that are highly marketable.

b.Short-term debt securities that tend to be illiquid.

c.Short-term and long-term debt securities.

(b) What is the geometric average annual return for the five consecutive annual returns of 11%, 15%, -5%, 17%, -10%?

a.4.27%

b.6.00%

c.4.60%

d.5.01%

e .Debt and equity securities.

(c) According to Capital Asset Pricing Model,

a.All rational investors should hold the market portfolio.

b.The market portfolio has the best risk-return trade off.

cInvestors have homogenous expectations.

d.All the other choices are correct.

(d) Which of the following statements is True about risk?

a.Idiosyncratic risk can be eliminated by adding more assets to the portfolio.

b.Systematic risk still remains in a fully diversified portfolio.

c.Firm-specific risk is measured by the error term in the single index model.

d.All of the other choices are correct.