Which one of the following describes systemic risk?

Which one of the following commences on the day inventory is purchased and ends on the day the payment for that inventory is collected? Assume all sales and purchases are on credit.

Inventory period

Accounts receivable period

Accounts payable period

Operating cycle

Cash cycle
Question 2
Which one of the following describes systemic risk?

Risk that affects a large number of assets

An individual security’s total risk

Diversifiable risk

Asset specific risk

Risk unique to a firm’s management
Question 3
Which one of the following terms best refers to the practice of investing in a variety of diverse assets as a means of reducing risk?

Systematic

Unsystematic

Diversification

Security market line

Capital asset pricing model

Question 4
Which one of the following is the slope of the security market line?

Risk-free rate

Market risk premium

Beta coefficient

Risk premium on an individual asset

Market rate of return4.
Question 5
Standard deviation measures _____ risk while beta measures _____ risk.

systematic; unsystematic

unsystematic; systematic

total; unsystematic

total; systematic

asset-specific; market
Question 6
Northern Wear stock has an expected return of 14.6 percent. Given the information below, what is the expected return on this stock if the economy is normal?

13 percent

16 percent

18 percent

21 percent

23 percent
Question 7
Which one of the following terms refers to a bond’s rate of return that is required by the market place?

Coupon rate

Yield to maturity