Quiz Ch 11 – Standard Deviation and Stock Return Characteristics
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
What is the relationship between a stock’s return standard deviation and its characteristics?
What is the relationship between a stock’s return standard deviation and its characteristics?
What has been the standard deviation of annual returns on a portfolio of U.S. common stocks approximately since 1900?
Why are the standard deviations of individual stocks typically higher than the standard deviation of the market portfolio?
True or false: Diversification can significantly reduce market risk in a stock portfolio.
True or false: The market risk premium can be estimated by determining the variance between the historical average return on common stocks and the risk-free interest rate.
True or false: The expected return on investment accounts for both the time value of money and the risks taken.
True or false: The expected return on an investment is the compensation for investors, covering both the waiting period and the concerns they may have.
True or false: Stock market indexes are in numerous countries beyond the United States.
True or false: The historical record does NOT demonstrate that investors have consistently received a risk premium for holding risky assets.
True or false: All common stock investors encounter macro risks.