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Question 1 of 10
1. Question
What is termed as a discount rate applied to the time value of money to make the present value of the investment equal to the future value of the investment?
Correct
Internal Rate of Return, or IRR, is a discount rate applied to the time value of money to make the present value of the investment equal to the future value of the investment. It is used to determine the viability of an investment. Investors often have goals that are represented by a percentage rate of return.
Incorrect
Internal Rate of Return, or IRR, is a discount rate applied to the time value of money to make the present value of the investment equal to the future value of the investment. It is used to determine the viability of an investment. Investors often have goals that are represented by a percentage rate of return.

Question 2 of 10
2. Question
What is not true about Net Present Value?
Correct
Net Present Value is a tool used to determine if an investment is worth the capital expenditure. The expected income from the investment is discounted to its value at the present using a firm’s minimum required return. If the present value of the income (discounted using the firm’s required rate of return) from the investment exceeds the present value of the capital expended, it is determined to be a viable investment.
Incorrect
Net Present Value is a tool used to determine if an investment is worth the capital expenditure. The expected income from the investment is discounted to its value at the present using a firm’s minimum required return. If the present value of the income (discounted using the firm’s required rate of return) from the investment exceeds the present value of the capital expended, it is determined to be a viable investment.

Question 3 of 10
3. Question
Which are the most useful descriptive statistics pertaining to the securities industries?
I. The measures of central tendency.
II. Range.
III. Standard deviation.
IV. Beta and its derivatives.
Correct
Descriptive statistics are a set of calculated numbers that are used to generalize a set of data. In relation to the securities industry, descriptive statistics tend to measure risk, reward (returns), and the ranges pertaining thereto. These measurements are useful to investors, allowing them to determine if a security matches their risk tolerance and return needs. The most useful descriptive statistics pertaining to the securities industries are the measures of central tendency (mean, median, and mode), range, standard deviation, and beta (and its derivatives).
Incorrect
Descriptive statistics are a set of calculated numbers that are used to generalize a set of data. In relation to the securities industry, descriptive statistics tend to measure risk, reward (returns), and the ranges pertaining thereto. These measurements are useful to investors, allowing them to determine if a security matches their risk tolerance and return needs. The most useful descriptive statistics pertaining to the securities industries are the measures of central tendency (mean, median, and mode), range, standard deviation, and beta (and its derivatives).

Question 4 of 10
4. Question
Which is not a measures of central tendency?
Correct
The most useful descriptive statistics pertaining to the securities industries are the measures of central tendency (mean, median, and mode), range, standard deviation, and beta (and its derivatives).
Incorrect
The most useful descriptive statistics pertaining to the securities industries are the measures of central tendency (mean, median, and mode), range, standard deviation, and beta (and its derivatives).

Question 5 of 10
5. Question
What is not true about median?
Correct
Median us the number representing the return that falls directly in the middle of all other returns of securities in the portfolio. It provides another view of empirical data to be considered with the other measures of central tendency. The median metric also helps the investor understand the impact of an outlier return and act accordingly.
Incorrect
Median us the number representing the return that falls directly in the middle of all other returns of securities in the portfolio. It provides another view of empirical data to be considered with the other measures of central tendency. The median metric also helps the investor understand the impact of an outlier return and act accordingly.

Question 6 of 10
6. Question
Which is the most recurrent return in a portfolio?
Correct
Mode is the most recurrent return in a portfolio. This measure of central tendency assists the investor in finding trends, positive or negative, and dealing with them appropriately.
Incorrect
Mode is the most recurrent return in a portfolio. This measure of central tendency assists the investor in finding trends, positive or negative, and dealing with them appropriately.

Question 7 of 10
7. Question
What is the definition of the mean?
Correct
Mean is the average return of all securities in a given portfolio. Mean is very useful as a metric of portfolio analysis in that it provides the investor a look at how the combined portfolio has performed. While the return of one security is useful in determining its validity in a portfolio, it is not useful in gauging the general performance of the entire portfolio and its relative cohesiveness.
Incorrect
Mean is the average return of all securities in a given portfolio. Mean is very useful as a metric of portfolio analysis in that it provides the investor a look at how the combined portfolio has performed. While the return of one security is useful in determining its validity in a portfolio, it is not useful in gauging the general performance of the entire portfolio and its relative cohesiveness.

Question 8 of 10
8. Question
What is not true about Standard deviation?
Correct
Standard deviation measures the distance each of the returns in the portfolio falls from the mean. The further spread the data is, the higher the measure of standard deviation. A higher standard deviation then indicates a high degree of volatility and thus risk. It is a very useful metric in determining the suitability of an investment for a client, risk averse or otherwise. Standard deviation may also apply to an individual security by measuring its historical mean performance against the historical returns making up the mean. In this case, too, a higher standard deviation represents a higher amount of volatility and risk.
Incorrect
Standard deviation measures the distance each of the returns in the portfolio falls from the mean. The further spread the data is, the higher the measure of standard deviation. A higher standard deviation then indicates a high degree of volatility and thus risk. It is a very useful metric in determining the suitability of an investment for a client, risk averse or otherwise. Standard deviation may also apply to an individual security by measuring its historical mean performance against the historical returns making up the mean. In this case, too, a higher standard deviation represents a higher amount of volatility and risk.

Question 9 of 10
9. Question
Which of the following cannot be attributed to Beta?
I. Beta is a measure of volatility used to judge the risk of a given security or portfolio.
II. A higher beta indicates a riskier portfolio or security.
III. Beta is a metric showing a security’s or portfolio’s correlation to market movement.
IV. A beta measurement of 1 indicates a 1for1 performance tracked against the security’s or portfolio’s benchmark.
Correct
Beta is a measure of volatility used to judge the risk of a given security or portfolio. A higher beta indicates a riskier portfolio or security. Beta is a metric showing a security’s or portfolio’s correlation to market movement. A beta measurement of 1 indicates a 1 for1 performance tracked against the security’s or portfolio’s benchmark.
Incorrect
Beta is a measure of volatility used to judge the risk of a given security or portfolio. A higher beta indicates a riskier portfolio or security. Beta is a metric showing a security’s or portfolio’s correlation to market movement. A beta measurement of 1 indicates a 1 for1 performance tracked against the security’s or portfolio’s benchmark.

Question 10 of 10
10. Question
What does Beta’s measurement above 1 indicates?
Correct
Beta measuring 0.50 in the same scenario would result in only a 25 percent decrease in value. Beta’s measurement works the same for measurements less than or greater than 1. A measurement above 1 indicates higher volatility and larger value swings. A measurement below 1 indicates lower volatility and lesser value swings.
Incorrect
Beta measuring 0.50 in the same scenario would result in only a 25 percent decrease in value. Beta’s measurement works the same for measurements less than or greater than 1. A measurement above 1 indicates higher volatility and larger value swings. A measurement below 1 indicates lower volatility and lesser value swings.