Financial Management - Study Mode
[#1001] Chance of happening any unfavourable event in near future is classified as
Correct Answer
(D) risk
Explanation
Solution: Chance of happening any unfavourable event in near future is classified as risk. In broad terms, risk involves exposure to some type of danger and the possibility of loss or injury. In general, risks can apply to your physical health or job security. In finance and investing, risk often refers to the chance an outcome or investment's actual gains will differ from an expected outcome or return. Risk includes the possibility of losing some or all of an original investment.
[#1002] A tighter probability distribution shows the
Correct Answer
(B) lower risk
Explanation
Solution: A tighter probability distribution shows the lower risk.
[#1003] Stock which has higher correlation with market tend to have
Correct Answer
(C) high beta, more risky
Explanation
Solution: Stock which has higher correlation with market tend to have high beta, more risky. High-beta stocks tend to be riskier but provide the potential for higher returns.
[#1004] According to probability distribution of rates of return, a close outcome to an expected value is shown by
Correct Answer
(C) more peaked distribution
Explanation
Solution: According to probability distribution of rates of return, a close outcome to an expected value is shown by more peaked distribution. Data that is more peaked is data that has a sharper peak compared to data with a more gradual slope. Gradual peaks indicate that your data rose steadily whereas a sharp peak indicates that your values increased rapidly.
[#1005] A range of probability distribution with 95.46% lies within
Correct Answer
(B) (+ 2σ and -2σ)
Explanation
Solution: