Risk and Return Quiz | Risk and Return Online Test for Practice

31. What does a higher standard deviation in an asset's returns indicate?

1. Higher predictability of returns
2. Greater uncertainty or risk
3. No change in risk
4. Lower return volatility

32. Which of the following is true about a risk-averse investor?

1. They prefer higher returns with no risk
2. They prefer portfolios with lower risk and moderate return
3. They prefer portfolios with high risk
4. They are indifferent to risk

33. What does the term "alpha" in investing refer to?

1. The measure of portfolio return above the market return
2. The level of systematic risk
3. The diversification of a portfolio
4. The risk-free rate

34. What does a high standard deviation in a stock's return indicate?

1. Lower risk
2. Higher risk
3. No risk
4. Moderate risk

35. Which of the following does NOT affect the required return of an asset?

1. Inflation rate
2. Time horizon
3. The asset’s correlation with the market
4. The investor's risk tolerance

36. Which of the following best defines "beta" in the Capital Asset Pricing Model (CAPM)?

1. Measure of a stock's volatility
2. Measure of systematic risk
3. Measure of total risk
4. Measure of expected return

37. The risk that affects the entire market is known as:

1. Diversifiable risk
2. Non-diversifiable risk
3. Specific risk
4. Idiosyncratic risk

38. Which of the following is true for a risk-free asset?

1. It offers no return
2. It offers a fixed return
3. Its return varies based on the market
4. It is subject to market volatility

39. What does the Sharpe Ratio measure?

1. Risk-adjusted return
2. Total risk
3. Return without risk
4. Volatility of returns

40. A portfolio with zero correlation between its assets is:

1. Perfectly diversified
2. Highly risky
3. Undiversifiable
4. Highly correlated