Question

In: Finance

1. Risk from investing in a security refers to: a. volatility of security price b. uncertainty...

1. Risk from investing in a security refers to:

a. volatility of security price

b. uncertainty about the future stock price

c. volatility of security returns

d. probability of loss from investing in the security

2. The expected value of annual returns of a portfolio is 10 percent with standard deviation of 20 percent. The compounded annual growth rate from investing in the portfolio is expected to be:

a. 10 percent

b. less than 10 percent

c. more than 10 percent

d. indeterminable

3. The price of a stock is $20. The stock is not expected to pay any dividend for the foreseeable future. The probability of the price next year being more than $40 is

      a. 0 percent

      b. the same as the return being more than $20

      c. the same as the return being more than 100 percent

     d. indeterminable

Solutions

Expert Solution

1)

Risk from investing in a security refers to

c) volatility of security returns

2)

The expected value of annual returns of a portfolio is 10 percent with standard deviation of 20 percent. The compounded annual growth rate from investing in the portfolio is expected to be

d. indeterminable

3)

The price of a stock is $20. The stock is not expected to pay any dividend for the foreseeable future. The probability of the price next year being more than $40 is

c. the same as the return being more than 100 percent


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