A Portfolio of Large Company Shares Would Contain Which One

question 12

Multiple Choice

A portfolio of large company shares would contain which one of the following types of securities?

• A)Equity of the firms which represent the smallest 20% of the companies.
• B)Government treasury bills.
• C)Long-term corporate bonds.
• D)Equities of firms included in the FTSE 100 index.
• E)Long-term government bonds.

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Definitions:

Expected Rate of Return

The anticipated return on an investment, calculated as an average probability-weighted return of possible outcomes.

T-Bill

A T-Bill, or Treasury Bill, is a short-term government security issued at a discount from the face value and pays no interest, but is redeemed at its full face value at maturity.

Risky Portfolio

A collection of investments with higher expected returns that comes with a greater level of risk and volatility compared to the overall market.

Standard Deviation

A statistical measure that quantifies the variation or spread of a set of numbers from its average, used to gauge volatility.