You've heard the expression "no pain, no gain"? In the investment world, the comparable phrase would be "no risk, no reward." How you feel about risking your money will drive many of your investment decisions. The risk-comfort scale extends from very conservative (you don't want to risk losing a penny regardless of how little your money earns) to very aggressive (you're willing to risk much of your money for the possibility that it will grow tremendously). As you might guess, most investors' tolerance for risk falls somewhere in between. If you're unsure of what your level of risk tolerance is, this quiz should help. 1. You win $300 in an office football pool. You: (a) spend it on groceries, (b) purchase lottery tickets, (c) put it in a money market account, (d) buy some stock. 2. Two weeks after buying 100 shares of a $20 stock, the price jumps to over $30. You decide to: (a) buy more stock; it's obviously a winner, (b) sell it and take your profits, (c) sell half to recoup some costs and hold the rest, (d) sit tight and wait for it to advance even more. 3. On days when the stock market jumps way up, you: (a) wish you had invested more, (b) call your financial advisor and ask for recommendations, (c) feel glad you're not in the market because it fluctuates too much, (d) pay little attention. 4. You're planning a vacation trip and can either lock in a fixed room-and-meals rate of $150 per day or book standby and pay anywhere from $100 to $300 per day. You:

list K mediums: a stock fund, a bond fund, and his own Sports and Casino Investment Plan (SCIP). The stock fund is a mutual fund investing in op traded stocks. The bond fund focuses on the bond market, which has a Table of Returns, Variances, and Covariances Average return Variance Covariance with stock Covariance with bond Stock Bond 0.148 0.06 0.014697 0.000155 0.000468 SCIP 0.152 0.160791 -0.002222 -0.000227 D - X

1. Which of the following statements are true?a. The value of any investment is based on the cash flows it is expected to generate in the future.b. Investors are not generally risk averse.c. Uncertain cash flows are preferred to certain cash flows.d. All of the above are true.e. None of the above are true. 2. A basic knowledge of finance will help you with your personal investments by helping you understanda. how to accurately predict changes in the short-term interest rates.b. how to determine the optimal dividend policy for each firm.c. how to determine which technology is most likely to be accepted by consumers.d. how to review companies and industries to determine their prospects for future growth and therisk inherent in those companies and industries.e. how to predict the growth in sales for the firm.  3. Which of the following events would make it more likely that a company would choose to call itsoutstanding callable bonds?a.A reduction in market interest rates.b.The company's…

20. A portfolio of assets has lower risk than holding one asset, but the same expected return and higher transaction costs. Which of the following statements is most correct? A. The portfolio is attractive to people who are risk-averse and risk-neutral, but not to risk seekers B. The portfolio is attractive to investors who are risk-neutral C. The portfolio is not attractive to investors who are risk-neutral D. The portfolio is attractive to investors who are risk seekers