YEAR BEGINING BALPMT INT 4391 00 $450.00 $131.73 $450.00 $450.0o S 31827 A) $4700.00 $3407 26 B) $3744.91 D) $4072.73 12) Changes in the general A) diversifiable risk C) market risk economy, like changes in interest rates or tax laws represent what type of risk? 12 B) company-unique risk D) unsystematic risk 13) Of the following different types of securities, which i A) long-term corporate bonds typically considered most risky? 13, B) common stocks of large companies D) long-term government bonds C) common stocks of small companies 14) Which of the following statements is MOST correct concerning diversification and risk? A) Risk-averse the familiarity reduces the risk nvestors often select portfolios that include only companies from the same industry group becaus B) Proper diversification generally results in the elimination of risk. C) Risk-averse investors often choose companies from different industries for their correlation of returns is less than if all the companies came from the same industry D) Oaly wealthy investors can diversify their portfolios because a portfolio must contain at least 50 stocks to gain 15) Corporate yield curves are Treasury curve to that of Treasury securities, though not necessarily parallel to the 15 A) flat B) equalC) lower D) higher 16) Premiums added to long term corporate securities include A) inflation premium, maturity risk premium, default risk premium, and liquidity premium. 16 B) inflation only C) maturity risk premium, default risk premium, and liquidity premium only. D) maturity risk premium and default risk premium only 17) How investors reduce the risk associated with an investment portfolio without having to accept a lower expected return? A) Increase the amount of money invested in the portfolio. B) Wait until the stock market rises. ) Purchase a variety of securities; ie., diversify ) Purchase stocks that have exceptionally high standard deviations 9) Which of the following factors affect the level of interest rates? Time preferences for consumption B) Risk D) All of the above