Test Bank all Chapters

Investment Analysis and Portfolio Management, 11e Frank Reilly, Keith Brown

(Test Bank all Chapters)

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Chapter 01 - The Investment Setting

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• Investors are willing to forgo current consumption in order to increase future consumption for a nominal rate of interest.
• True
• False

ANSWER: False

POINTS: 1

REFERENCES: 1.1 What is an Investment?

QUESTION TYPE: True / False

HAS VARIABLES: False

LEARNING OBJECTIVES: INVE.REIL.19.01.01 - Why do individuals invest?

KEYWORDS: Bloom’s: Remember

DATE CREATED: 3/10/2018 3:12 AM

DATE MODIFIED: 3/10/2018 3:12 AM

• The rate of exchange between certain future dollars and certain current dollars is known as the pure rate of interest.
• True
• False

ANSWER: True

POINTS: 1

REFERENCES: 1.1 What is an Investment?

QUESTION TYPE: True / False

HAS VARIABLES: False

LEARNING OBJECTIVES: INVE.REIL.19.01.02 - What is an investment?

KEYWORDS: Bloom’s: Remember

DATE CREATED: 3/10/2018 4:25 AM

DATE MODIFIED: 3/10/2018 4:25 AM

• An investment is the current commitment of dollars over time to derive future payments to compensate the investor for

the time funds are committed, the expected rate of inflation, and the uncertainty of future payments.

• True
• False

ANSWER: True

POINTS: 1

REFERENCES: 1.1 What is an Investment?

QUESTION TYPE: True / False

HAS VARIABLES: False

LEARNING OBJECTIVES: INVE.REIL.19.01.02 - What is an investment?

KEYWORDS: Bloom’s: Understand

DATE CREATED: 3/10/2018 4:26 AM

DATE MODIFIED: 3/10/2018 4:26 AM

• The holding period return (HPR) is equal to the holding period yield (HPY) stated as a percentage.
• True
• False

ANSWER: False 2 / 4

Chapter 01 - The Investment Setting

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POINTS: 1

REFERENCES: 1.1 What is an Investment?

QUESTION TYPE: True / False

HAS VARIABLES: False

LEARNING OBJECTIVES: INVE.REIL.19.01.03 - How do investors measure the rate of return on an investment?KEYWORDS: Bloom’s: Remember

DATE CREATED: 3/10/2018 4:26 AM

DATE MODIFIED: 3/10/2018 4:26 AM

• The geometric mean of a series of returns is always larger than the arithmetic mean, and the difference increases with

the volatility of the series.

• True
• False

ANSWER: False

POINTS: 1

REFERENCES: 1.1 What is an Investment?

QUESTION TYPE: True / False

HAS VARIABLES: False

LEARNING OBJECTIVES: INVE.REIL.19.01.03 - How do investors measure the rate of return on an investment?KEYWORDS: Bloom’s: Remember

DATE CREATED: 3/10/2018 4:27 AM

DATE MODIFIED: 3/10/2018 4:27 AM

• The expected return is the average of all possible returns.
• True
• False

ANSWER: False

POINTS: 1

REFERENCES: 1.2 Measures of Return and Risk

QUESTION TYPE: True / False

HAS VARIABLES: False

LEARNING OBJECTIVES: INVE.REIL.19.01.03 - How do investors measure the rate of return on an investment?KEYWORDS: Bloom’s: Remember

DATE CREATED: 3/10/2018 4:27 AM

DATE MODIFIED: 3/10/2018 4:27 AM

• An individual who selects the investment that offers greater certainty when everything else is the same is known as a

risk averse investor.

• True
• False

ANSWER: True

POINTS: 1 3 / 4

Chapter 01 - The Investment Setting

Copyright Cengage Learning. Powered by Cognero. Page 3

REFERENCES: 1.2 Measures of Return and Risk

QUESTION TYPE: True / False

HAS VARIABLES: False

LEARNING OBJECTIVES: INVE.REIL.19.01.04 - How do investors measure the risk related to alternative investments?KEYWORDS: Bloom’s: Understand

DATE CREATED: 3/10/2018 4:27 AM

DATE MODIFIED: 3/10/2018 4:28 AM

• Two measures of the risk premium are the standard deviation and the variance.
• True
• False

ANSWER: False

POINTS: 1

REFERENCES: 1.2 Measures of Return and Risk

QUESTION TYPE: True / False

HAS VARIABLES: False

LEARNING OBJECTIVES: INVE.REIL.19.01.04 - How do investors measure the risk related to alternative investments?KEYWORDS: Bloom’s: Remember

DATE CREATED: 3/10/2018 4:28 AM

DATE MODIFIED: 3/10/2018 4:28 AM

• The variance of expected returns is equal to the square root of the expected returns.
• True
• False

ANSWER: False

POINTS: 1

REFERENCES: 1.2 Measures of Return and Risk

QUESTION TYPE: True / False

HAS VARIABLES: False

LEARNING OBJECTIVES: INVE.REIL.19.01.04 - How do investors measure the risk related to alternative investments?KEYWORDS: Bloom’s: Remember

DATE CREATED: 3/10/2018 4:28 AM

DATE MODIFIED: 3/10/2018 4:28 AM

• The coefficient of variation is the expected return divided by the standard deviation of the expected return.
• True
• False

ANSWER: False

POINTS: 1

REFERENCES: 1.2 Measures of Return and Risk

QUESTION TYPE: True / False

HAS VARIABLES: False

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