Which of the following correlations would represent 2 assets that tend to move in tandem with one another?

A) 0.81.

B) -0.68.

C) 0.16.

D) -0.11.

Answer: A

Which of the following has the greatest liquidity risk?

A) Real estate investment trust (REIT).

B) Municipal bond unit investment trust (UIT).

C) Long-term bond mutual fund.

D) Rental apartment building.

Answer: D

Which of the following investments is the most liquid?

A) Municipal revenue bond issued by a township.

B) Oil drilling limited partnership interest.

C) Common stock in a small oil drilling corporation that is quoted on the Pink Sheets.

D) Long-term municipal bond fund.

Answer: D

Given the following information, calculate the risk-adjusted return:

90-day T-bill rate: 4%.

Actual return: 14%.

Beta 1.40.

CPI 3%.

Standard Deviation 5.0.

A) 2.0.

B) 5.0.

C) 10.0.

D) 11.0.

Answer: A

If a stock has a beta of less than 1.0, the stock's price will:

A) not increase as much as the market when the market is up.

B) increase more than the market when the market is up.

C) decrease more than the market when the market is down.

D) decrease regardless of whether the market is up or down.

Answer: A

One element of the formula used to compute the Sharpe ratio is:

A) standard deviation.

B) alpha.

C) beta.

D) net present value.

Answer: A