Question 1

Savings accounts are essentially risk-free.

True

False

Question 2

Risk is uncertainty about what might have happened in the past.

True

False

Question 3

When there is risk involved, there is no variability in potential future payoffs from a decision.

True

False

Question 4

Consider ABC Company, which sells office equipment to other companies on credit. Which of the following accounts on the balance sheet would involve the most credit risk to ABC Company?

Accounts Receivable

Cash

Wages Payable

Income Tax Payable

Question 5

If ABC Company opens operations in Canada, they would not incur any exchange rate risk.

True

False

Question 6

There are some industries and businesses that do not face risk.

True

False

Question 7

A corporate bond would likely pay a higher interest rate than a bank savings account.

True

False

Question 8

Taking on avoidable risks will increase your return on investment.

True

False

Question 9

All risks in the stock market can be eliminated through diversification.

True

False

Question 10

Beta measures the market-wide risk that can’t be eliminated through diversification.

True

False

Question 11

An investment portfolio holding only McDonald’s and Walmart would likely go up more than the market when the market goes up and go down more than the market when the market goes down.

True

False

Question 12

An investment in a cigarette manufacturer would likely go up more than the market when the market goes up and go down more than the market when the market goes down.

True

False

Question 13

According to the video, if Ford Motor Company was expected to earn 11% (the average return on equity investments), I should not invest.

True

False

Question 14

According to the video, if Microsoft was expected to earn 11% (the average return on equity investments), I should invest.

True

False

Question 15

According to the video, if Walmart was expected to earn _____ or greater, I should invest.

1%

7.2%

0%

5%

Question 16

A company with stable cash flows would likely be able to borrow more.

True

False

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