What are the two primary categories of risk associated with stock ownership?

Systemic Risk and Unsystemic Risk Market Risk and Business Risk Financial Risk and Operational Risk Inflationary Risk and Deflationary Risk

Which type of risk is specific to a particular company and does not affect its competitors?

Unsystemic Risk Systemic Risk Market Risk Financial Risk

What is the recommended number of stocks in a portfolio for effective diversification to mitigate unsystemic risk?

Up to 21 At least 50 No more than 10 Exactly 30

Which of the following is NOT a systemic risk factor that can impact stock prices?

Declining business margins De-growth in GDP Interest rate tightening Geopolitical risk

What technique is used to minimize systemic risk in an investment portfolio?

Hedging Diversification Speculation Arbitrage

What is the term for the probabilistic expectation of a return on an investment?

Expected Return Guaranteed Return Risk-Free Rate Market Return

How is the expected return of a portfolio calculated?

E(RP) = W1R1 + W2R2 + W3R3 + ———– + WnRn E(RP) = (R1 + R2 + R3 + ... + Rn) / N E(RP) = W1/R1 + W2/R2 + W3/R3 + ... + Wn/Rn E(RP) = (W1 + W2 + W3 + ... + Wn) * (R1 + R2 + R3 + ... + Rn)