How can the capital allocation line be described in the context of an investment opportunity set formed with a risky asset and a risk-free asset? The line representing only risk-free returns The line representing only risky asset returns The line representing market equilibrium The line representing risk-return combinations

The line representing risk-return combinations

What causes the capital allocation line to change from a straight line to a kinked line? Borrowing rate exceeding lending rate Increasing risk-free rate Equal borrowing and lending rates Decreasing market volatility

Borrowing rate exceeding lending rate

Based on their relative degrees of risk tolerance, how will investors hold assets in their portfolios? Equal amounts of risky assets Only risky assets Varying amounts of risky and risk-free assets Only risk-free assets

Varying amounts of risky and risk-free assets

Asset allocation may involve which two key decisions? Allocation only between risk-free and risky assets Allocation only among different risky assets Allocation between risk-free and risky assets, and among different risky assets Allocation based on market trends

Allocation between risk-free and risky assets, and among different risky assets

Market risk is also referred to as what? Idiosyncratic risk Diversifiable risk Unique risk or firm-specific risk Systematic risk or nondiversifiable risk

Systematic risk or nondiversifiable risk

Diversifiable risk is also known by what other term? Nondiversifiable risk Unique risk or firm-specific risk Systematic risk Market risk

Unique risk or firm-specific risk

How is the standard deviation of a portfolio of risky securities calculated? The difference between the highest and lowest returns The square root of the weighted sum of the securities' variances and covariances The average of the securities' returns The sum of the securities' variances

The square root of the weighted sum of the securities' variances and covariances

Under ASC Topic 280, which of the following is NOT required to be disclosed if it constitutes more than ten percent of the appropriate total? Factors used to identify operating segments The identity of a major customer who accounts for thirty percent of all sales Revenues from external customers Types of products and services from which each operating segment derives its revenues

The identity of a major customer who accounts for thirty percent of all sales

Which item is NOT required to be included in interim reports for each operating segment? Revenues from internal customers Revenues from external customers Intersegment revenues Segment profit or loss

Revenues from internal customers

Which criterion is NOT considered by management for aggregation under ASC Topic 280? The total amount of long-lived assets for each operating segment The nature of the production process The type or class of customer The distribution methods

The total amount of long-lived assets for each operating segment

Which is NOT an advantage of segment reporting that aligns with a company's internal structure? Analysts' predictions of management actions that affect cash flows should improve An easy application of GAAP to internal segments would exist, that would not have been possible if the segments were not aggregated The incremental cost should be minimal A company's internal segments are probably less subjective than industry-based segments

An easy application of GAAP to internal segments would exist, that would not have been possible if the segments were not aggregated

Which of the following statements is related to market efficiency trends and tends to be supported by correct evidence? _____ easy for investors to earn abnormal returns short run money moves are easy to predict markets are more likely only weak form efficient markets tend to react quickly to new information

markets tend to react quickly to new information

A person sold stock for $3.15/share more than what it was bought for and received $2.60 in dividends. Which of the following is correct? _____ capital gain would have been less if no dividends were received capital gains yield is positive dividend yield is expressed as a % of par value dividend yield is greater than capital gains yield

capital gains yield is positive

The formula for calculating Earnings Per Share (EPS) is (Net Income - Preferred Stock Dividends) / _____ Total # of Common Shares Issued Total # of Preferred Shares Outstanding Weighted Avg. # of Common Shares Outstanding Weighted Avg. # of Preferred Shares Outstanding

Weighted Avg. # of Common Shares Outstanding

If expenses are less than revenue, what will happen to the business? The business will suffer a loss. The business will break even. The business will make a profit. The business will incur a deficit.

The business will make a profit.

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