Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Concept explainers
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Question
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Transcribed Image Text:In Dow Theory, a primary trend lasts from:
A.
B. Weeks to months.
C.
Months to years.
At least a decade.
D. Days to weeks.
When a person accepts an investment when it is presented in terms of risk surrounding potential gains but
may reject the same investment if it is presented in terms of risk surrounding potential losses, he is suffering
from the bias of
10
A. framing
B. regret avoidance
C. overconfidence
D. conservatism
E. none of the above
Objective technical analysis methods:
A. Require a disciplined approach for success
B. Are well-defined procedures that issue unambiguous signals
C. Normally witness less drawdown
D. Normally witness high drawdown
A.
D.
Investor under-reaction
B. Unrealistic expectations
A company whose stock is in a well-established uptrend, report earnings slightly above consensus estimates.
After an initial rally, the stock then ends lower on the day. This would probably be an example of:
12
C.
A short-coming of fundamental analysis
9
11
Market discounting
O
O
O
O
O
O
O
O
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