CIMA Risk & Return Analysis

Question 1

What does standard deviation measure in a portfolio?

Accepted Answer

Volatility of returns

Answer

The average return

Answer

Systematic risk

Answer

Total return

Question 2

Which of the following is an example of systematic risk?

Accepted Answer

Interest rate hike

Answer

Company bankruptcy

Answer

Product recall

Answer

Management fraud

Question 3

Which metric evaluates a portfolio’s return per unit of total risk?

Accepted Answer

Sharpe Ratio

Answer

Alpha

Answer

Beta

Answer

Treynor Ratio

Question 4

What does alpha measure in performance evaluation?

Accepted Answer

Excess return relative to benchmark

Answer

Risk-free rate

Answer

Volatility

Answer

Correlation with market

Question 5

Which type of risk can be reduced through diversification?

Accepted Answer

Unsystematic risk

Answer

Systematic risk

Answer

Market risk

Answer

Interest rate risk

Question 6

What does the Treynor Ratio use to measure risk?

Accepted Answer

Beta

Answer

Standard deviation

Answer

R-squared

Answer

Alpha