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1.6 Computer quiz

  1. Do you have to register to study this course on-line?
    1. All the material can be accessed free of charge.
    2. Register to gain access to restricted material and pedagogical support.
    3. All the services on this website are for registered users only.

  2. A small trading volume in your favorite stock tells you that:
    1. you may have to wait some time before you can find a buyer.
    2. the stock is over-valued and the investors wait for the price to drop.
    3. the market is liquid with many buyers and sellers at the same time.
    4. the investors may be on holidays.

  3. Bonds are often less volatile and less risky than stocks
    1. because bonds holders are reimbursed before stock owners in a bankruptcy.
    2. because bonds generally pay a fixed coupon.
    3. because they can always be sold at least for their net asset value.

  4. How does the volatility change in a stock market crash?
    1. It rises.
    2. It doesn't change.
    3. It first falls and then rises.

  5. Does a high yield portfolio always imply a large volatility?
    1. Not for investors who keep only one high performance asset.
    2. Yes, high yields necessarily imply large price correlations and volatility.
    3. Not necessarily, if the asset prices are anti-correlated.

  6. Cost averaging strategies
    1. reduce the transaction costs.
    2. average out the transaction costs.
    3. force investors to buy in falling markets.

  7. A market is efficient if $ ^\diamondsuit$
    1. the investors pay minimal fees.
    2. the prices have equal chances to rise and fall.
    3. a large number of arbitragers exploit opportunities to make easy money.

  8. Any point ( $ \sigma_b,E_b$ ) on the efficient frontier in (1.4#fig.1) satisfies the conditions $ ^\diamondsuit$
    1. The volatility sigma-b is always between sigma-1 and sigma-2.
    2. The expected return E-b is always between E-1 and E-2.
    3. The expected return E-c is always larger than the risk-free return r.

SYLLABUS  Previous: 1.5.3 Maximum likelihood estimate  Up: 1 INTRODUCTION  Next: 1.7 Exercises