All Free Management Sciences MCQs with Answers

• A. Alpha coefficient
• B. Beta coefficient
• C. Stand-alone coefficient
• D. Relevant coefficient

Explanation: Beta measures a stock's sensitivity to market movements and therefore captures its systematic, or relevant, risk.

• A. Average rate of return
• B. Expected rate of return
• C. Past rate of return
• D. Weighted rate of return

Explanation: Expected rate of return is the probability-weighted average of possible returns.

• A. Risk taking
• B. Risk aversion
• C. Market aversion
• D. Portfolio aversion

Explanation: Risk premium compensates investors for bearing risk, so the amount demanded generally rises with their degree of risk aversion.

• A. Negativity
• B. Positivity
• C. Correlation
• D. Diversification

Explanation: With perfectly positively correlated assets, both assets move in the same direction and diversification cannot reduce portfolio risk.

• A. Mean
• B. Weighted average
• C. Mean correlation
• D. Negative correlation

Explanation: Portfolio risk is often lower than the weighted average of individual asset risks because imperfect correlations allow diversification to…

• A. Coefficient of market
• B. Relative to market
• C. Ir-relative to market
• D. Same with market

Explanation: Beta measures a stock's systematic volatility relative to market movements, with the market beta equal to 1.

• A. Security market line
• B. Required return line
• C. Market risk line
• D. Riskier return line

Explanation: The Security Market Line shows the relationship between a security's required return and its systematic risk, measured by beta.

• A. Correlation
• B. Move tendency
• C. Variables tendency
• D. Double tendency

Explanation: Correlation describes the tendency of two variables to move together, including both the direction and strength of their relationship.

• A. Probability
• B. Risk
• C. Chance
• D. Event happening

Explanation: Probability is the numerical measure of the chance that an event will occur, ranging from 0 for impossibility to 1 for certainty.

• A. Risk factors
• B. Premium factors
• C. Bond buying factors
• D. Multi model

Explanation: Term-structure, inflation, and bond-default premiums are risk-related components used in determining required returns on bonds.

• A. Tendency coefficient
• B. Variable coefficient
• C. Correlation coefficient
• D. Double coefficient

Explanation: The correlation coefficient is the statistical measure of how strongly and in what direction two variables move together.

• A. Chance
• B. Event happening
• C. Probability
• D. Risk

Explanation: Risk is the possibility that an unfavorable event or loss may occur, whereas probability measures the likelihood of an event.

• A. Risk
• B. Return
• C. Deviation
• D. Both A and B

Explanation: The coefficient of variation compares risk, measured by standard deviation, with return, usually as standard deviation divided by expected…

• A. Higher risk
• B. Lower risk
• C. Expected risk
• D. Peaked risk

Explanation: A tighter probability distribution means possible returns are clustered more closely around the expected return, indicating less…

• A. Coefficient of variation
• B. Coefficient of deviation
• C. Coefficient of standard
• D. Coefficient of return

Explanation: The coefficient of variation is calculated as standard deviation divided by expected rate of return.

• A. Stock risk
• B. Portfolio risk
• C. Diversifiable risk
• D. Market risk

Explanation: Strikes, failed marketing efforts, and lawsuits are largely company-specific events that can be reduced through diversification.

• A. Market portfolio
• B. Return portfolio
• C. Correlated portfolio
• D. Diversified portfolio

Explanation: A market portfolio contains all available stocks in the market, weighted according to their market values.

• A. Coefficient risk volatility
• B. Market risk volatility
• C. Stock market volatility
• D. Portfolio market portfolio

Explanation: Beta measures a stock's sensitivity to movements in the overall stock market, so it indicates the stock's market-risk volatility relative…

• A. Patents premium
• B. Competition premium
• C. Company's beta
• D. Expiry premium

Explanation: Patent expiry and increased industry competition can change a firm's systematic risk by affecting its sensitivity to economic and…

• A. Multiple risk stock
• B. Varied risk stock
• C. Total risk stock
• D. Average risk stock

Explanation: A beta of one means the stock's systematic risk and expected market movement are average relative to the market portfolio.