1. How is preferred stock similar to bonds?

Fixed maturity date

Constant payment

Pays both principal and interest to investor

Both "Constant payment" & "Fixed maturity date"

All of these choices are correct.

3. Standard deviation is an important concept in portfolio theory because:

it is a measure of the variability of a stock's return.

it is a measure of risk for a stock when it is held on a stand-alone basis.

it is a measure of risk for a stock when it is held in a diversified portfolio.

Both "it is a measure of risk for a stock when it is held on a stand-alone basis" and "it is a measure of the variability of a stock's return" are correct.

All of these choices are correct.

4. Risk in finance:

is variability in return.

will be accepted by some investors if higher expected returns are offered in compensation.

can be decomposed into business-specific and market components.

All of these choices are correct.

5. The risks associated with owning a single stock are called:

market risk because the stocks are purchased in the stock market.

stand-alone risk because the stock stands alone outside of any portfolio.

systematic risk because all stocks in the system are affected.

business risk because the stocks represent businesses.