MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the

question.

21. Combining uncorrelated assets will

A) Decrease the overall risk level of a portfolio.

B) Cause the other assets in the portfolio to become positively related.

C) Increase the overall risk level of a portfolio.

D) Not change the overall risk level of a portfolio.

22. In the real world, most of the assets available to investors

A) Tend to be somewhat negatively correlated

B) Tend to be somewhat positively correlated

C) Tend to be uncorrelated

D) Tend to be either perfectly positively or perfectly negatively correlated

23. You noticed that the exchange rate between the Korean won and the U.S. dollar has changed

considerably. The USD:KRW exchange rate has moved from 800 won per dollar to 1000 won per

dollar. Korean won:

A. Appreciated by 20%.

B. Depreciated by 20%

C. Appreciated by 25%

D. Depreciated by 25%.

24. Here are some quotes of the USD:CHF dollar spot exchange rate given simultaneously on the phone, if you were trading USD for CHF, which quote is the best quote:

A. Bank A: 1.3435 - 1.3440

B. Bank B: 1.3440 - 1.3445

C. Bank C: 1.3433 - 1.3450

D. Bank D: 1.3430 1.3360

25. In the above example if you trading CHF for USD, which quote is the best quote:

A. Bank A: 1.3435 - 1.3440

B. Bank B: 1.3440 - 1.3445

C. Bank C: 1.3433 - 1.3450

D. Bank D: 1.3430 1.3360