462. The standard deviation is calculated as the square root of variance because the variance calculation results in which of the following?
A. Too many decimal places.
B. Sample bias.
C. Two roots.
D. Squared units.

463. The calculation of covariance most closely resembles which other statistical measure?
A. Variance.
B. Beta.
C. Standard deviation.
D. Correlation.

464. If an asset has zero beta, then it can be described in which of the following ways?
A. It is very risky.
B. It is risk free.
C. It is riskier than the market portfolio.
D. It has the same risk as the market portfolio.

465. If an asset has a beta of one, then it can be described in which of the following ways?
A. It is very risky.
B. It is risk free.
C. It is riskier than the market portfolio.
D. It has the same risk as the market portfolio.

466. If a share return is higher than is justified by the share’s beta, then which of the following will restore market equilibrium?
A. Fall in the share’s price, rise in share return.
B. Rise in the share’s price, fall in share return.
C. Fall in the share’s price, fall in share return.
D. Rise in the share’s price, rise in share return.

467. The concept of equilibrium in the Capital Asset Pricing Model (CAPM) model is highly influenced by which of the following concepts from economics?
A. Perfect competition.
B. Monopolistic competition.
C. Oligopoly.
D. Monopoly.

468. A ‘commodities forward contract’ is which of the following?
A. A contract in which the counterparties agree to exchange a commodity at some date in the future but at a price decided now.
B. A contract in which the counterparties agree to exchange a commodity now but at a price decided in the future.
C. A standardized exchange traded contract.
D. The option but not the right to buy the underlying at some point in the future.

469. Which of the following qualities does not distinguish a futures from a forward contract?
A. It comes in a variety of standardized forms.
B. It is exchange traded.
C. It is easier to know the value of a futures contract through the process of price discovery.
D. It is possible to hedge using futures.

470. If you were a famer growing crops for market, how would you hedge your risk?
A. By taking contracts to sell at a pre-agreed forward price.
B. By taking contracts to buy at a pre-agreed forward price.
C. By taking contracts to sell at the spot price.
D. By taking contracts to buy at the spot price.

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