Risk and Return Measures - Sample Questions 1 - 5
- With respect to the internal rate of return on an investment (IRR):
- It is the weighted average term to maturity of a bond's cash flows.
- It strips out the cash flow bias for an investment's return.
- It is a simple period return.
- It is a dollar weighted return which assumes reinvestment at the IRR to maturity.
- All of the following are forms of dollar weighted return, except:
- Yield to Maturity.
- Yield to Call.
- Internal Rate of Return.
- None of the foregoing.
- The current yield of Varity Corp. 9.07 of 20 is:
- 8.9% if Varity's current market value is 102
- 10.4% if Varity trades presently at 874
- a & c
- b & c
- Taxable Equivalent Yield may be defined as:
- The different between a tax-exempt yield and a taxable yield.
- The rate at which the investor would be indifferent to the tax-exempt yield.
- The yield obtained by "grossing up" the tax-exempt yield by the reciprocal of the investor's marginal tax bracket.
- Both b & c
- None of the foregoing.
- The nominal return on an investment is 11.34%. The real return is:
- The nominal return adjusted for inflation.
- 7.57% using a 3% inflation assumption.
- 7.57% using a 3.5% inflation assumption.
- Both a & c
Investing BasicsRisk-adjusted return is a measurement of risk for an investment or portfolio.
Investing BasicsBuying below the margin of safety minimizes the risk to the investor.
Mutual Funds & ETFsFind out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
Mutual Funds & ETFsFind out about the Guggenheim Enhanced Short Duration ETF, and learn detailed information about this fund that focuses on fixed-income securities.
Mutual Funds & ETFsFind out about the Shares Morningstar Small-Cap Value ETF, and learn detailed information about this exchange-traded fund that focuses on small-cap equities.
Mutual Funds & ETFsFind out about the iShares MSCI KLD 400 Social exchange-traded fund, and learn detailed information about its characteristics, suitability and recommendations.
Mutual Funds & ETFsFind out about the Guggenheim BulletShares 2018 High Yield Corporate Bond ETF, and get information about this ETF that focuses on high-yield corporate bonds.
Mutual Funds & ETFsFind out about the PowerShares DWA SmallCap Momentum Portfolio ETF, and explore detailed analysis the fund's characteristics, suitability and recommendations.
Mutual Funds & ETFsLearn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
Mutual Funds & ETFsFind out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
The amount of risk that an insurance company retains after subtracting ...
Coverage that provides financial protection to investors, financial ...
The maximum loss from a peak to a trough of a portfolio, before ...
The absolute level of a fund's investments.
A technique used by insurance companies to calculate loss reserves.
The financial benefit that a risk-taking activity will bring ...
The Federal Deposit Insurance Corporation, or FDIC, is a government-run agency that provides protection against losses if ... Read Full Answer >>
The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
The term delta refers to the change in price of an underlying stock or exchange-traded fund (ETF) as compared to the corresponding ... Read Full Answer >>
An investor who is overweight in a particular sector risks a loss in value for the portfolio if there is a downturn in that ... Read Full Answer >>
The retail sector consists of companies operating in multiple industries such as specialty retail, general retail, food and ... Read Full Answer >>
Like all equity investments, insurance companies present investors with market risk. Insurance companies, like banks, also ... Read Full Answer >>