Financial Management - Study Mode
[#1006] Coefficient of variation is used to identify an effect of
Correct Answer
(D) Both A and B
Explanation
Solution: Coefficient of variation is used to identify an effect of risk and return. The coefficient of variation (CV) is a statistical measure of the dispersion of data points in a data series around the mean. In finance, the coefficient of variation allows investors to determine how much volatility, or risk, is assumed in comparison to the amount of return expected from investments.
[#1007] In portfolio, beta of individual security in portfolio represented as their weighted average is classified as
Correct Answer
(B) beta of portfolio
Explanation
Solution: In portfolio, beta of individual security in portfolio represented as their weighted average is classified as beta of portfolio. The beta of a portfolio is the weighted sum of the individual asset betas, According to the proportions of the investments in the portfolio.
[#1008] Coefficient of beta is used to measure stock volatility
Correct Answer
(B) relative to market
Explanation
Solution: Coefficient of beta is used to measure stock volatility relative to market. A beta coefficient is a measure of the volatility, or systematic risk, of an individual stock in comparison to the unsystematic risk of the entire market. In statistical terms, beta represents the slope of the line through a regression of data points from an individual stock's returns against those of the market.
[#1009] Probability distribution is classified as normal if expected return lies between
Correct Answer
(A) ( + 1 and -1)
Explanation
Solution: Probability distribution is classified as normal if expected return lies between ( + 1 and -1). A probability distribution is a statistical function that describes all the possible values and likelihoods that a random variable can take within a given range.
[#1010] In case of Gordon's Model, the MP for zero payout is zero. It means that:
Correct Answer
(C) Investors are not ready to offer any price