Answer the following:

What is a portfolio?

What is diversification?

What is correlation coefficient between stocks?

How can we achieve diversification in stock investments?

What is investment return?

What is coefficient variation? How to interpret CV?

How to measure a stock’s expected rate of return, requirement rate of return, and risk?

What is CAPM/SML?

Given additional inflation, how would SML change?

If investors are risk adverse, how would SML change?

What is market equilibrium for stock price? Market price vs intrinsic value.

What is market risk premium?

What is stock Beta? How beta is measured? How to interpret Beta?

What is stand-alone risk?

What are components of stand-alone risk? There are many different name for firm-level and market-level risk. What do them mean?

What is efficient market hypothesis and its three forms? How efficient market hypothesis works?

What is bond? US treasury bond? Corporate bond?

Why company issue bond?

What is credit rating? What factors affect credit rating?

What are types of bank debt? Types of corporate bonds? Zero coupon bond?

What are four key relationships about Bond?

What are key components about bond?

What is YTM? YTC? Current yield? Capital gain yield?

What is callable bond? Sinking fund? Convertible bond?

What is term structure of interest rate? What are key components of term structure of interest rate?

What is bond spread? Default risk premium? Liquidity premium? Maturity risk premium?

What is reinvestment risk?