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If the risk/return performance of a stock lies below the Security Market Line, the stock is said to have a:

SECTION B: PRACTICAL QUESTION 1:   Download the document by clicking on the blue button, make the necessary changes, and upload when finished.     

QUESTION 4: Fill in the answer in the blank space below.  

QUESTION 2:                                                                                 Choose either True or False.   

The type of risk which CANNOT be eliminated through diversification is:

You recently met with your client, Al, age 40. Al is widowed and has one dependent child. During your meeting with him you discussed the concept of risk management. Which of the following statements regarding the ways to manage risk is incorrect?

1.3 What is a Microsoft Excel spreadsheet? (1)

Ella and Jackson would like to begin saving for their children’s college education. They have two kids, ages 7 and 9. Each child will begin college at 18 and attend a private university for four years. Tuition is currently $25,000 per year and is increasing at 2% per year. They can earn an after-tax rate of return of 8%. How much must they save at the end of each year if they would like to make the last payment at the beginning of their youngest child’s first year of college? Make sure to type in your calculator inputs ( NPV , N, I, PV, PMT, FV ) to receive full credit.

Given a risk event that is of the type below, which way of handling risk (Risk Management Alternative) is most appropriate?   a. High Frequency/High Severity:   b. High Frequency/Low Severity:   c. Low Frequency/High Severity:   d. Low Frequency/Low Severity

SECTION A: THEORY                                                                                                               QUESTION 1:    Choose the correct answer. Only one answer is correct.