The most commonly accepted definition of risk is one that involves a well-known statistical measure known as the?
I. Wild card
II. Outcome
III. Variance
IV. Denominator

Investors quantify risk in terms of the variance of an asset’s expected return. The variance of a random variable is a measure of which of the following?
I. The common denominator of an unexpected variable
II. The hazard, peril, exposure to loss or injury
III. The dispersion of the possible outcomes around the expected value.
IV. The statistical outcome of both capital gain and loss

Investors, however, do not view possible returns above the expected return as an unfavorable outcome. In fact, such outcomes are favorable. Because of this, some researchers have argued that measures of risk should not consider which of the following?
I. The possible loss above the expected loss.
II. The possible loss below the expected loss.
III. The possible returns below the expected return.
IV. The possible returns above the expected return.

In the case of bonds, investors gauge the which of the following risk(s) of an entity by looking at the credit ratings assigned to issues by rating companies, popularly referred to as rating agencies?
I. Liquidity risk
II. Downgrade risk
III. Default risk
IV. Credit risk

Which of the following is(are) rating agencies in the United States?
I. Moody’s Investors Service
II. Standard & Poor’s
III. Leeman Brothers
IV. Fitch

Which of the following is the risk that a bond will be downgraded?
I. Bond risk
II. Liquidity risk
III. Default risk
IV. Downgrade risk

When an investor wants to sell an asset, he or she is concerned with which of the following?
I. The buyers
II. The investors
III. The price
IV. The value of the asset

If foreign currency capital gains and losses raise the standard deviation of the foreign bond return, perhaps there is a case for doing which of the following?
I. Unhedging the currency risk.
II. Hedging the currency risk.
III. Shorting the exchange rate.
IV. Longing the exchange rate.

Hedging the currency risk does raise the correlation between which of the following?
I. the foreign bond
II. U.S. bonds
III. U.S. stocks
IV. Non U.S. Dollar Government Bond Index

Which of the following actions would an investor do if he/she is concerned about the volatility of foreign bond investments?
I. Diversify the bond investment portfolio
II. Short the foreign bond investment
III. Hedge the foreign bonds
IV. Invest on other U.S. bonds