Risk attributes

Question 1

The concept of risk differs from uncertainty in that risk

Answer 1

deals with the unknowns that have measurable probabilties

Question 2

Risk can involve

Answer 2

loss or gains

Question 3

When calculating a sample variance to estimate the variance of an entire population, it is necessary to

Answer 3

subtract 1 from the total number of data points

Question 4

Covariance is best described as the

Answer 4

deviation from the mean of two variables

Question 5

An investor is concerned about exchange rates. Currency risk can be mitigated by

Answer 5

purchase Yankee bonds

Question 6

Log returns used in finance modeling normal distributions utilize which risk measures

Answer 6

standard deviation

Question 7

Mathematically, standard deviation is defined as the

Answer 7

square root of variance

Question 8

A statistical measure of the dispersion of a stock is most commonly known as

Answer 8

volatility

Question 9

a measure of volatility

Answer 9

standard deviation

Question 10

The expected value of the difference between the variable and its mean squared is known as

Answer 10

variance

Question 11

Variance is defined as the

Answer 11

expected value of the difference between variable and its mean squared

Question 12

T bills are

Answer 12

zero-coupon bonds

Question 13

A consultant reviewing the use of standard deviation most likely tells an investor that standard deviation is a

Answer 13

useful measure to measure confidence in statistical conclusions

Question 14

is a central quantity in statistics

Answer 14

variance

Question 15

Covariance is calculated by

Answer 15

multiplying the correlation between two variables by the standard deviation of each variable

Question 16

A bond investor is concerned with credit risk. A consultant advises that this risk does not include

Answer 16

interest rate risk

Question 17

Value at risk measures

Answer 17

amount of potential loss that could happen in an investment or a portfolio of investments over a given time period.

Question 18

A historical reference to the standard error of the mean was the predecessor to

Answer 18

standard deviation

Question 19

An investor reviewing total risk in a portfolio should consider

Answer 19

systematic and idiosyncratic risk