CFA Practice Question

There are 221 practice questions for this study session.

CFA Practice Question

Which statement is CORRECT?
A. Risk and returns CANNOT be easily controlled. The risk/return tradeoff is the balance between the desire for the lowest possible risk and the highest possible return.
B. The liquidity risk refers to the bid-ask spread on an asset.
C. Unsystematic risk does not matter to the management of a company because it can be diversified away.
Explanation: Return is NOT easily controlled but risk CAN be managed and controlled.

It is the uncertainty of the bid-ask spread that creates the liquidity risk.

In a well-diversified portfolio, unsystematic risk does not matter, though it matters to the management of an individual company.

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nmech1984 tricky...
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