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16. Which of the following statement is incorrect? A)The coefficient of variation divides the standard deviation of the returns of an asset by the expected

16. Which of the following statement is incorrect?

A)The coefficient of variation divides the standard deviation of the returns of an asset by the expected rate of return of that asset.

B)The capital appreciation component of a stock's return considers the change in price of a stock divided by the initial price of the stock.

C)If the price of an asset has not increased or decreased since the original purchase of the asset, then the total return of the asset (if no dividends were paid during the period) is equal to the capital appreciation component return.

D)Most of the answers are correct except one.

E)The standard deviation is a measure of systematic risk.

17 Which of the following statements is correct?

A)All the answers are correct.

B)By investing in only one asset, an investor can reduce the risk.

C)If an asset's price implies that the expected return is greater than that predicted by the CAPM, that asset will plot above the Security Market Line.

D)The normal distribution is a skewed distribution that is completely described by its correlation coefficient and coefficient of variation.

E)The coefficient of variation divides the variance of the returns of an asset by the expected rate of return of that asset.

18 (TRUE or FALSE?) Whenever a bond's coupon rate is equal to the market rate of interest on similar bonds (the bond's yield), the bond will sell at par value, and we call such bonds par-value bonds.

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