Financial Management - Study Mode

[#501] 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.

[#502] A range of probability distribution with 95.46% lies within
Correct Answer

(B) (+ 2σ and -2σ)

Explanation

Solution:

[#503] 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.

[#504] 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.

[#505] 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.