5) None of the above, unless you believe "failed patent applications" would only affect a specific firm and not the entire field (i.e., by putting new inventions into the public domain).
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Can you explain how you get the answer.
1) If you buy the ETF with the ticker DOG you more exposed to market risk than firm specific risk?
true or false
2) An investor who buys and sells government notes each day is assured of a certain return because treasury notes have no default risk and the coupon is fixed.
true or false
3) Investors who have combined the MSCI EAFE Index with the S&P 500 index between the years 1970 to 2009 have exposed themselves to less risk and received greater returns than those investors who held only the S&P 500.
true or false
4) If you borrow at 6 percent per year for five years and use the proceeds to buy a five year bond that has a Yield to Maturity of 8 percent your leveraged position is doomed because of credit risk. (Assume that all bonds pay interest semiannually and that all interest received is reinvested at 8% per year.)
true or false
5) Firm-specific risk reflects volatility tied to:
a) rising interest rates.
b) falling unemployment.
c) failed patent applications.
d) election-year jitters.
6)If you buy the ETF with the ticker SPY is your portfolio devoid of risk?
a) Yes
b) Cannot say
c) Depends
d) No
