the economics of money, banking, and financial markets

145 #

© 2014 Pearson Canada Inc.#

4. 
   

   A higher ____ means that an asset's return is more sensitive to changes in the value of the
   market portfolio.
   A) alpha
   B) beta
   C) CAPM
   D) APT
   Answer: B
   Diff: 1 Type: MC Page Ref: 5A1- 7
   Topic: Questions for Web Appendix on Asset Pricing
   Skill: Recall
   Objective List: Appendix: Models of Asset Pricing

   
   


5. 
   

   The riskiness of an asset that is unique to the particular asset is ____.
   A) systematic risk
   B) portfolio risk
   C) investment risk
   D) nonsystematic risk
   Answer: D
   Diff: 1 Type: MC Page Ref: 5A1- 7
   Topic: Questions for Web Appendix on Asset Pricing
   Skill: Recall
   Objective List: Appendix: Models of Asset Pricing

   
   


6. 
   

   The risk of a well-diversified portfolio depends only on the ____ risk of the assets in the
   portfolio.
   A) systematic
   B) nonsystematic
   C) portfolio
   D) investment
   Answer: A
   Diff: 1 Type: MC Page Ref: 5A1- 7
   Topic: Questions for Web Appendix on Asset Pricing
   Skill: Recall
   Objective List: Appendix: Models of Asset Pricing

   
   


7. 
   

   Both the CAPM and APT suggest that an asset should be priced so that it has a higher
   expected return ____.
   A) when it has a greater systematic risk
   B) when it has a greater risk in isolation
   C) when it has a lower systematic risk
   D) when it has a lower systematic risk and a lower risk in isolation
   Answer: A
   Diff: 1 Type: MC Page Ref: 5A1- 8 - 12
   Topic: Questions for Web Appendix on Asset Pricing
   Skill: Applied
   Objective List: Appendix: Models of Asset Pricing