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Questions and Answers
What is a risk-free asset?
What is a risk-free asset?
- An asset with certain return and zero default risk (correct)
- An asset with uncertain return and non-zero default risk
- An asset with certain return and non-zero default risk
- An asset with uncertain return and zero default risk
According to Markowitz (1952), what is the focus of portfolios?
According to Markowitz (1952), what is the focus of portfolios?
- Maximizing return while ignoring risk
- Minimizing both risk and return
- Maximizing risk and return simultaneously
- Minimizing risk while maximizing return (correct)
What is the general definition of return?
What is the general definition of return?
- The total of income stream and change in asset price (correct)
- The change in asset price (capital gain/loss)
- The difference between the amount received and the initial investment
- The income stream associated with an investment
What does a risky asset entail?
What does a risky asset entail?
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How is a portfolio defined?
How is a portfolio defined?
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In Modern Portfolio Theory, what is the primary focus in relation to risk and return?
In Modern Portfolio Theory, what is the primary focus in relation to risk and return?
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What is the distinguishing feature of a risk-free asset?
What is the distinguishing feature of a risk-free asset?
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Which factor contributes to the total return of an investment?
Which factor contributes to the total return of an investment?
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What is the primary function of portfolio weights in defining a portfolio?
What is the primary function of portfolio weights in defining a portfolio?
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According to Markowitz (1952), what approach characterizes a risk-averse investor's focus on portfolios?
According to Markowitz (1952), what approach characterizes a risk-averse investor's focus on portfolios?
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