Question: Which stylistic movement in film involved purposely distorted sets and images to convey a psychological feeling or attitude?
Answer Options: Dogme 95 German Expressionism Italian Neorealism French New Wave Correct Answer: German Expressionism
Question: Which term is in the predicate position of the sentence “No cats are friendly”?
Answer Options: cats friendly No cats This sentence does not have a predicate position. Correct Answer: friendly
Question: “It is illegal because it’s against the law.” This statement commits which of the following fallacies?
Answer Options: Circular reasoning Non sequitur Slippery slope Appeal to pity None of these Correct Answer: Circular reasoning
Question: “Sharks can be dangerous, so you should be careful when you go surfing.” This statement commits which of the following fallacies?
Answer Options: Appeal to ignorance Ad hominem Slippery slope Begging the question None of these Correct Answer: None of these
Question: “With our company, you can save up to 15%.” This statement employs which of the following rhetorical devices?
Answer Options: Proof surrogate Euphemism Hyperbole Correct Answer: Proof surrogate
Question: Person 1: “You shouldn’t lie to your kids about the existence of Santa. It will create distrust between you and them.” Person 2: “People have lied to their kids about Santa for hundreds of years.” Person 2 commits which of the following fallacies?
Answer Options: Red herring Subjectivist Appeal to tradition None of these Correct Answer: Appeal to tradition
Question: __________ fallacy, the flawed reasoning lies in accepting that because most in the populace believe that it is the case, then it must be true that X is the case.
Answer Options: Ad hominem Appeal to popular opinion Appeal to authority Slippery slope Correct Answer: Appeal to popular opinion
Question: In the __________ argument, if the first event occurs, then another will follow, and if this happens, then another will follow, and this will be followed by progressively worse outcomes leading to a most undesirable end. This chain of conditional inferences is fallacious only if one or more of the chains is false or implausible, or if the indicated end is neither objectionable nor undesirable.
Answer Options: ad hominem appeal to popular belief or practice appeal to authority slippery slope Correct Answer: slippery slope
Question: The facts of a case are reported by different news outlets in very different ways. One news outlet makes the president’s actions sound very reasonable, whereas the other makes the president’s actions sound horrible. This is an example of __________.
Answer Options: Photo manipulation Irony Satire Spin Correct Answer: Spin
Question: Jane has a portfolio of 20 average stocks, and Dick has a portfolio of 2 average stocks. Assuming the market is in equilibrium, which of the following statements is CORRECT? a. Jane’s portfolio will have less diversifiable risk and also less market risk than Dick’s portfolio. b. The required return on Jane’s portfolio will be lower than that on Dick’s portfolio because Jane’s portfolio will have less total risk. c. Dick’s portfolio will have more diversifiable risk, the same market risk, and thus more total risk than Jane’s portfolio, but the required (and expected) returns will be the same on both portfolios. d. If the two portfolios have the same beta, their required returns will be the same, but Jane’s portfolio will have less market risk than Dick’s. e. The expected return on Jane’s portfolio must be lower than the expected return on Dick’s portfolio because Jane is more diversified.
Correct Answer: c. Dick’s portfolio will have more diversifiable risk, the same market risk, and thus more total risk than Jane’s portfolio, but the required (and expected) returns will be the same on both portfolios.
Question: Stocks A and B each have an expected return of 12%, a beta of 1.2, and a standard deviation of 25%. The returns on the two stocks have a correlation of +0.6. Portfolio P has 50% in Stock A and 50% in Stock B. Which of the following statements is CORRECT? a. Portfolio P has a beta that is greater than 1.2. b. Portfolio P has a standard deviation that is greater than 25%. c. Portfolio P has an expected return that is less than 12%. d. Portfolio P has a standard deviation that is less than 25%. e. Portfolio P has a beta that is less than 1.2.
Correct Answer: d. Portfolio P has a standard deviation that is less than 25%.
Question: Stocks A, B, and C all have an expected return of 10% and a standard deviation of 25%. Stocks A and B have returns that are perfectly positively correlated, while Stock C’s returns are uncorrelated with those of A and B. Which of the following statements is CORRECT if you form a portfolio of these three stocks? a. The portfolio will have an expected return of 10% and a standard deviation of 25%. b. The portfolio’s expected return will be greater than 10%. c. The portfolio’s standard deviation will be less than 25%. d. The portfolio’s standard deviation will be greater than 25%. e. The beta of the portfolio will be less than 1.
Correct Answer: c. The portfolio’s standard deviation will be less than 25%.
Question: Stocks A and B each have an expected return of 15%, a standard deviation of 20%, and a beta of 1.2. The returns on the two stocks have a correlation coefficient of +0.6. You have a portfolio that consists of 50% of Stock A and 50% of Stock B. Which of the following statements is CORRECT? a. The portfolio’s beta is less than 1.2. b. The portfolio’s expected return is 15%. c. The portfolio’s standard deviation is greater than 20%. d. The portfolio’s beta is greater than 1.2. e. The portfolio’s standard deviation is 20%.
Correct Answer: b. The portfolio’s expected return is 15%.
Question: Stock A has a beta of 0.8, Stock B has a beta of 1.0, and Stock C has a beta of 1.2. Portfolio P has 1/3 of its value invested in each stock. Each stock has a standard deviation of 25%, and their returns are independent of one another, i.e., the correlation coefficients between each pair of stocks is zero. Assuming the market is in equilibrium, which of the following statements is CORRECT? a. Portfolio P’s expected return is greater than the expected return on Stock B. b. Portfolio P’s expected return is equal to the expected return on Stock A. c. Portfolio P’s expected return is less than the expected return on Stock B. d. Portfolio P’s expected return is equal to the expected return on Stock B. e. Portfolio P’s expected return is greater than the expected return on Stock C.
Correct Answer: d. Portfolio P’s expected return is equal to the expected return on Stock B.
Question: In a portfolio of three randomly selected stocks, which of the following could NOT be true, i.e., which statement is false? a. The riskiness of the portfolio is less than the riskiness of each of the stocks if they were held in isolation. b. The riskiness of the portfolio is greater than the riskiness of one or two of the stocks. c. The beta of the portfolio is lower than the lowest of the three betas. d. The beta of the portfolio is higher than the highest of the three betas. e. The beta of the portfolio is equal to the weighted average of the individual stocks’ betas.
Correct Answer: c. The beta of the portfolio is lower than the lowest of the three betas.
Question: Stock A has a beta = 0.8, while Stock B has a beta = 1.6. Which of the following statements is CORRECT? a. Stock B’s required return is double that of Stock A’s. b. If the marginal investor becomes more risk averse, the required return on Stock B will increase by more than the required return on Stock A. c. An equally weighted portfolio of Stocks A and B will have a beta lower than 1.2. d. If the marginal investor becomes more risk averse, the required return on Stock A will increase by more than the required return on Stock B. e. If the risk-free rate increases but the market risk premium remains constant, the required return on Stock A will increase by more than that on Stock B.
Correct Answer: b. If the marginal investor becomes more risk averse, the required return on Stock B will increase by more than the required return on Stock A.
Question: Stock A has an expected return of 12%, a beta of 1.2, and a standard deviation of 20%. Stock B also has a beta of 1.2, but its expected return is 10% and its standard deviation is 15%. Portfolio AB has $900,000 invested in Stock A and $300,000 invested in Stock B. The correlation between the two stocks’ returns is zero (that is, rAB=0). Which of the following statements is CORRECT? a. Portfolio AB’s standard deviation is 17.5%. b. The stocks are not in equilibrium based on the CAPM; if A is valued correctly, then B is overvalued. c. The stocks are not in equilibrium based on the CAPM; if A is valued correctly, then B is undervalued. d. Portfolio AB has a standard deviation that is equal to 25%. e. Portfolio AB has a standard deviation that is less than 25%.
Correct Answer: b. The stocks are not in equilibrium based on the CAPM; if A is valued correctly, then B is overvalued.
Question: Stock X has a beta of 0.7 and Stock Y has a beta of 1.3. The standard deviation of each stock’s returns is 20%. The stocks’ returns are independent of each other, i.e., the correlation coefficient, r, between them is zero. Portfolio P consists of 50% X and 50% Y. Given this information, which of the following statements is CORRECT? a. Portfolio P has a standard deviation of 20%. b. The required return on Portfolio P is equal to the market risk premium (rM – rRF). c. Portfolio P has a beta of 0.7. d. Portfolio P has a beta of 1.0 and a required return that is equal to the riskless rate, rRF. e. Portfolio P has the same required return as the market (rM).
Correct Answer: e. Portfolio P has the same required return as the market (rM).
Question: Which of the following statements is CORRECT? (Assume that the risk-free rate is a constant.) a. If the market risk premium increases by 1%, then the required return will increase for stocks that have a beta greater than 1.0, but it will decrease for stocks that have a beta less than 1.0. b. The effect of a change in the market risk premium depends on the slope of the yield curve. c. If the market risk premium increases by 1%, then the required return on all stocks will rise by 1%. d. If the market risk premium increases by 1%, then the required return will increase by 1% for a stock that has a beta of 1.0. e. The effect of a change in the market risk premium depends on the level of the risk-free rate.
Correct Answer: d. If the market risk premium increases by 1%, then the required return will increase by 1% for a stock that has a beta of 1.0.