Which of the following statements is FALSE?
A) When stocks are perfectly positively correlated, the set of portfolios is identified graphically by a straight line between them.
B) An investor seeking high returns and low volatility should only invest in an efficient portfolio.
C) When the correlation between securities is less than 1, the volatility of the portfolio is reduced due to diversification.
D) Efficient portfolios can be easily ranked, because investors will choose from among them those with the highest expected returns.
Answer: D
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Return on net worth equals return on assets times _____
a. profit margin b. cost of goods sold c. asset turnover d. financial leverage
Assume IBM enters into a forward contract to purchase 100,000 euros at a rate of $1.60/euro one year from today. If the spot exchange rate is $2/euro one year later, what is the dollar amount that IBM must pay to receive the euros?
A) $100,000 B) $160,000 C) $200,000 D) $300,000