Risk and Return Measures - Sample Questions 11 - 15

  1. Your client, Geoffrey Harrow, inquires about the appropriateness of a municipal bond for his portfolio. You would tell him that:
    1. The inclusion of a municipal bond would make little sense for a taxpayer in a high marginal tax bracket.
    2. Municipal bonds are typically exempt from all manner of income tax.
    3. A revenue bond's debt is serviced by an income generating facility and bears less risk than a general obligation bond.
    4. Municipal bonds contain implicit federal backing.
  2. Calculate the after-tax yield for an investor in the 35% marginal tax bracket. The investment yielded 17.3% with 14% coming from capital appreciation and the remaining 3.3% coming from dividends.
    1. 11.2%
    2. 16.15%
    3. Between 15% and 17.3%
    4. Both b & c.
  3. The difference between beta and alpha is:
    1. Beta measures systematic risk, whereas alpha measure total risk.
    2. Beta measures total risk, where as alpha measures excess over market risk.
    3. Alpha measures the incremental return that a manager adds over the benchmark, while beta measures risk in the market for a portfolio of securities.
    4. Beta measures market risk, whereas alpha measures excess return.
  4. Measures of central tendency include all of the following, EXCEPT:
    1. Time-weighted return.
    2. Dollar-weighted return.
    3. Standard deviation.
    4. Coefficient of variation.
    5. R2
  5. Semivariance may be defined as:
    1. A simplified version of standard deviation.
    2. A measure of skew.
    3. The average squared deviation below the mean.
    4. A measure of value at risk.
Sample Questions 16 - 20

You May Also Like

Related Articles
  1. Professionals

    Worried About Stocks? Try on Convertibles

  2. Entrepreneurship

    Fed Raising Rates Affects Startup Funding

  3. Professionals

    Risks to Consider When Investing in ...

  4. Personal Finance

    Why Cash Could Be Your Best Bet

  5. Options & Futures

    Options Strategies That Profit From ...

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!