Financial Management - Study Mode

[#686] The relevant risk for a well-diversified portfolio is____________.
Correct Answer

(D) market risk

Explanation

Solution: The relevant risk for a well-diversified portfolio is market risk. Market risk is the possibility of an investor experiencing losses due to factors that affect the overall performance of the financial markets in which he or she is involved.

[#687] The decision function of financial management can be broken down into the__________ decisions.
Correct Answer

(B) investment, financing, and asset management

Explanation

Solution: The decision function of financial management can be broken down into the investment, financing, and asset management decisions.

[#688] Which of the following portfolios has the least reduction of risk?
Correct Answer

(A) A portfolio with securities all having positive correlation with each other

Explanation

Solution: A portfolio with securities all having positive correlation with each other has the least reduction of risk. A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds.

[#689] The time required to process and execute an order is called
Correct Answer

(B) lead time

Explanation

Solution: The time required to process and execute an order is called lead time. Lead time is the amount of time that passes from the start of a process until its conclusion.

[#690] Portfolio risk is best measured by the______________.
Correct Answer

(C) weighted average of individual risk

Explanation

Solution: Portfolio risk is best measured by the weighted average of individual risk. Portfolio risk is a chance that the combination of assets or units, within the investments that you own, fail to meet financial objectives.