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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