Return to Sender
You bought a share of stock for $20 and sold it a year later for $35. The $15 profit you made on the price increase is known by this specific term.
capital gains
A sudden surge in nationwide inflation causes the Federal Reserve to raise interest rates, causing prices across the whole stock market to dip. This represents this broad type of risk
systemic risk
This famous, classic proverb serves as the primary rule for portfolio diversification.
What is "Don't put all your eggs in one basket"?
The overall stock market benchmark always carries a Beta rating equal to this number
1
This animal is the largest mammal in the world
blue whale
A corporation distributes a portion of its corporate profits directly to shareholders in the form of cash payments.
dividend
A major labor strike shuts down production at a single car manufacturing company. This incident is an example of this company-specific risk.
What is unsystematic risk (or company risk)?
According to the lesson slides, holding a mix of this specific range of stocks across varied industries wipes out almost all unsystematic risk.
10-15 stocks
Utilities and grocery store chains tend to have a Beta under 1.0, earning them this classification because their prices swing less than the market.
defensive stock
A group of crows is known by this
murder
Before buying a stock, Maya calculates a planned 10% gain. After selling a year later during a downturn, her actual return is a 2% loss. The 2% loss is classified as this type of return
realized return
The slide deck compares investment risk to this amusement park ride because higher-risk stocks experience wider price swings up and down.
roller coaster
In a properly diversified portfolio, if a retail company suffers a major loss, this offsetting event keeps the portfolio balanced
What are gains from other companies in different industries?
A tech company has an aggressive Beta of 1.5. If the overall market jumps by 10%, this stock is expected to jump by this percentage.
15%
This marine animal has three hearts and blue blood.
octopus
An investor buys 100 shares of stock at $10 each ($1,000 total). Over the year, they collect $0.50 per share in dividends, but the stock price falls to $9.00 per share by the time they sell. This is their total dollar realized return.
-50
An investor buys shares in 30 different companies, but every single company is in the video game development industry. This is the main reason why unsystematic risk was not eliminated.
What is not spreading investments across completely different industries?
An investor currently holds shares in 5 different computer software firms. Name two non-tech industries they should invest in next to diversify.
What are utilities, healthcare, retail, energy, or consumer goods?
In the Capital Asset Pricing Model formula, $R_{rf}$ stands for this guaranteed benchmark, typically measured using U.S. Treasury bills.
What is the risk-free rate?
This flightless Australian bird appears on the country’s coat of arms alongside the kangaroo
emu
Relying strictly on this metric before purchasing a stock is dangerous because it represents hope rather than real-world outcomes.
expected return
This specific type of risk cannot be eliminated through portfolio planning or diversification because all stocks tend to react to major economic news.
What is systematic risk (or market risk)?
When an investor successfully uses diversification to eliminate all company risk, this is the only type of risk remaining in their portfolio
What is systematic risk (or market risk)?
If the CAPM required return formula calculates a benchmark of 8%, but an analyst projects that the stock will actually return 11% in reality, the stock is considered this.
undervalued
A snail can sleep for this many years at a time during extreme weather
3