Bond yields are one of the main tools used to measure the overall performance of US bond markets.

True

False

There is a negative relationship between changes in the return earned by an investment and the future value of the investment.

True

False

Modern portfolio theory attempts to achieve diversification by focusing on the correlations between assets held in the portfolio.

True

False

Any portfolio that falls on the efficient frontier must:

		provide the highest level of risk for the lowest level of return.
		provide the highest return for a given level of risk.
		provide the lowest return for a given level of risk.
		none of the above

A stock that with a beta of 1.2 has 20% more unsystematic risk than the market portfolio.

True

False

The profit margin typically earned by stockbrokers is referred to as the bid-ask spread.

True

False

Stevens Industries has been a publicly traded company for ten years, but decides to issue new shares to the general public to finance a project. The sale of these new shares would be classified as a:

		primary market transaction
		secondary market transaction
		money market transaction
		none of the above

Assume an investor has decided to take a position in a randomly selected stock. Which of the following positions will have the most amount of risk, all else being equal?

		Long purchase made on a cash basis.
		Long purchase made with the use of a margin account.
		Short sell made with the use of a margin account.
		Short sell made on a cash basis.