Question 1

Which one of the following is the positive square root of the variance?

Accepted Answer

A) Standard deviation 
B) Mean 
C) Risk-free rate 
D) Average return 
E) Real return 
A) Standard deviation 
B) Mean 
C) Risk-free rate 
D) Average return 
E) Real return A

Question 2

The stock of Arbitrage Training is priced at $37 per share and has a dividend yield of 2.8 percent.The firm pays constant annual dividends.What is the amount of the next dividend per share?

Accepted Answer

A) $1.15 
B) $1.77 
C) $1.04 
D) $0.96 
E) $1.20 
A) $1.15 
B) $1.77 
C) $1.04 
D) $0.96 
E) $1.20 C

Question 3

A stock has yielded returns of 9 percent, 16 percent, 18 percent, and -6 percent over the past four years, respectively.What is the standard deviation of these returns?

Accepted Answer

A) 15.52 percent 
B) 15.86 percent 
C) 11.05 percent 
D) 9.38 percent 
E) 10.87 percent 
A) 15.52 percent 
B) 15.86 percent 
C) 11.05 percent 
D) 9.38 percent 
E) 10.87 percent E

Question 4

A bond has an average return of 11.2 percent and a standard deviation of 14.6 percent.What range of returns would you expect to see 68 percent of the time on this security?

Accepted Answer

A) -18 percent to 43.9 percent 
B) -18 percent to 40.1 percent 
C) -3.4 percent to 27.8 percent 
D) -3.4 percent to 25.8 percent 
E) -2.5 percent to 13.9 percent 
A) -18 percent to 43.9 percent 
B) -18 percent to 40.1 percent 
C) -3.4 percent to 27.8 percent 
D) -3.4 percent to 25.8 percent 
E) -2.5 percent to 13.9 percent

Question 5

Skyler Parts pays a constant annual dividend.Last year, the dividend yield was 3.75 percent when the stock was selling for $19.75 per share.What is the current price of the stock if the current dividend yield is 5 percent?

Accepted Answer

A) $17.81 
B) $14.81 
C) $17.92 
D) $20.84 
E) $21.37 
A) $17.81 
B) $14.81 
C) $17.92 
D) $20.84 
E) $21.37

Question 6

Over the last four years, a stock has had an arithmetic average return of 12.8 percent.Three of those four years produced returns of 22.6 percent, 15.2 percent, and -24.1 percent, respectively.What is the geometric average return for this four-year period?

Accepted Answer

A) 10.18 percent 
B) 8.39 percent 
C) 11.67 percent 
D) 12.40 percent 
E) 12.67 percent 
A) 10.18 percent 
B) 8.39 percent 
C) 11.67 percent 
D) 12.40 percent 
E) 12.67 percent

Question 7

A security produced returns of 11 percent, 7 percent, 9 percent, 13 percent, and -14 percent over the past five years, respectively.Based on these five years, what is the probability that this stock will earn more than 16.16 percent in any one given year?

Accepted Answer

A) .5 percent 
B) 1.0 percent 
C) 2.5 percent 
D) 5.0 percent 
E) 16.0 percent 
A) .5 percent 
B) 1.0 percent 
C) 2.5 percent 
D) 5.0 percent 
E) 16.0 percent

Question 8

A stock produced returns of 11 percent, 19 percent, and 2 percent over three of the past four years, respectively.The arithmetic average for the past four years is 9 percent.What is the standard deviation of the stock's returns for the four-year period?

Accepted Answer

A) 5.46 percent 
B) 8.54 percent 
C) 9.09 percent 
D) 6.83 percent 
E) 7.70 percent 
A) 5.46 percent 
B) 8.54 percent 
C) 9.09 percent 
D) 6.83 percent 
E) 7.70 percent

Question 9

Kelly decided to accept the risk and purchased a high growth stock.Her returns for the past five years are 32 percent, 24 percent, -48 percent, 12 percent, and -9 percent, respectively.What is the standard deviation of these returns?

Accepted Answer

A) 23.20 percent 
B) 35.46 percent 
C) 17.88 percent 
D) 32.03 percent 
E) 28.39 percent 
A) 23.20 percent 
B) 35.46 percent 
C) 17.88 percent 
D) 32.03 percent 
E) 28.39 percent

Question 10

Which one of the following categories has the widest frequency distribution of returns for the period 1926-2014?

Accepted Answer

A) Small-company stocks 
B) U.S.Treasury bills 
C) Long-term government bonds 
D) Inflation 
E) Large-company stock 
A) Small-company stocks 
B) U.S.Treasury bills 
C) Long-term government bonds 
D) Inflation 
E) Large-company stock

Question 11

The standard deviation measures the _____ of a security's returns over time.

Accepted Answer

A) average value 
B) frequency 
C) volatility 
D) mean 
E) arithmetic average 
A) average value 
B) frequency 
C) volatility 
D) mean 
E) arithmetic average

Question 12

A stock has produced returns of 11.9 percent, 5.6 percent, 16.4 percent, and -4.2 percent over the past four years, respectively.What is the geometric average return?

Accepted Answer

A) 7.14 percent 
B) 7.47 percent 
C) 6.83 percent 
D) 6.91 percent 
E) 7.02 percent 
A) 7.14 percent 
B) 7.47 percent 
C) 6.83 percent 
D) 6.91 percent 
E) 7.02 percent

Question 13

One year ago, Jeni purchased 250 shares of TMO stock for $12,658.Today, she sold those shares for $52 per share.What is the capital gains yield on this investment if the dividend yield is 1.1 percent?

Accepted Answer

A) -3.00 percent 
B) -2.75 percent 
C) 3.10 percent 
D) 2.70 percent 
E) 1.95 percent 
A) -3.00 percent 
B) -2.75 percent 
C) 3.10 percent 
D) 2.70 percent 
E) 1.95 percent

Question 14

Over the past five years, a stock returned 8.4 percent, 8.7 percent, 3.2 percent, 1.5 percent, and 11.5 percent, respectively.What is the variance of these returns?

Accepted Answer

A) ..041302 
B) ..043375 
C) ..006824 
D) ..165321 
E) ..005459 
A) ..041302 
B) ..043375 
C) ..006824 
D) ..165321 
E) ..005459

Question 15

Home Grown Tomatoes stock returned 11.6 percent, 3.2 percent, 8.1 percent, 14.2, and 9.8 percent over the past five years, respectively.What is the arithmetic average return for this period?

Accepted Answer

A) 9.38 percent 
B) 10.62 percent 
C) 8.10 percent 
D) 11.93 percent 
E) 10.10 percent 
A) 9.38 percent 
B) 10.62 percent 
C) 8.10 percent 
D) 11.93 percent 
E) 10.10 percent

Question 16

Bandor Furniture pays a constant annual dividend.Last year, the dividend yield was 4.9 percent when the stock was selling for $43.50 per share.What is the current price of the stock if the current dividend yield is 4 percent?

Accepted Answer

A) $35.51 
B) $53.29 
C) $38.62 
D) $41.54 
E) $42.07 
A) $35.51 
B) $53.29 
C) $38.62 
D) $41.54 
E) $42.07

Question 17

The stock of Pepito Organic Foods is priced at $45 per share and has a dividend yield of 2.2 percent.The firm pays constant annual dividends.What is the amount of the next dividend per share?

Accepted Answer

A) $1.10 
B) $1.72 
C) $0.99 
D) $0.91 
E) $1.15 
A) $1.10 
B) $1.72 
C) $0.99 
D) $0.91 
E) $1.15

Question 18

A stock has had returns of 14 percent, -18 percent, 2 percent, 33 percent, 27 percent, and 6 percent over the last six years, respectively.What is the geometric return for this stock?

Accepted Answer

A) 10.82 percent 
B) 9.32 percent 
C) 10.31 percent 
D) 9.47 percent 
E) 8.88 percent 
A) 10.82 percent 
B) 9.32 percent 
C) 10.31 percent 
D) 9.47 percent 
E) 8.88 percent

Question 19

If the financial markets are efficient then:

Accepted Answer

A) stock prices should remain constant. 
B) stock prices should increase or decrease slowly as new events are analyzed and the information is absorbed by the markets. 
C) an increase in the value of one security should be offset by a decrease in the value of another security. 
D) stock prices will change only when an event actually occurs, not at the time the event is anticipated. 
E) stock prices should respond only to unexpected news and events. 
A) stock prices should remain constant. 
B) stock prices should increase or decrease slowly as new events are analyzed and the information is absorbed by the markets. 
C) an increase in the value of one security should be offset by a decrease in the value of another security. 
D) stock prices will change only when an event actually occurs, not at the time the event is anticipated. 
E) stock prices should respond only to unexpected news and events.

Question 20

Assume large-company stocks returned 12.1 percent on average over the past 88 years.The risk premium on these stocks was 8.6 percent and the inflation rate was 3.0 percent.What was the average nominal risk-free rate of return for those 88 years?

Accepted Answer

A) 3.5 percent 
B) 9.1 percent 
C) 4.6 percent 
D) .5 percent 
E) 6.5 percent 
A) 3.5 percent 
B) 9.1 percent 
C) 4.6 percent 
D) .5 percent 
E) 6.5 percent

Which one of the following is the positive square root of the variance?

The stock of Arbitrage Training is priced at $37 per share and has a dividend yield of 2.8 percent.The firm pays constant annual dividends.What is the amount of the next dividend per share?

A stock has yielded returns of 9 percent, 16 percent, 18 percent, and -6 percent over the past four years, respectively.What is the standard deviation of these returns?

A bond has an average return of 11.2 percent and a standard deviation of 14.6 percent.What range of returns would you expect to see 68 percent of the time on this security?

Skyler Parts pays a constant annual dividend.Last year, the dividend yield was 3.75 percent when the stock was selling for $19.75 per share.What is the current price of the stock if the current dividend yield is 5 percent?

Over the last four years, a stock has had an arithmetic average return of 12.8 percent.Three of those four years produced returns of 22.6 percent, 15.2 percent, and -24.1 percent, respectively.What is the geometric average return for this four-year period?

A security produced returns of 11 percent, 7 percent, 9 percent, 13 percent, and -14 percent over the past five years, respectively.Based on these five years, what is the probability that this stock will earn more than 16.16 percent in any one given year?

A stock produced returns of 11 percent, 19 percent, and 2 percent over three of the past four years, respectively.The arithmetic average for the past four years is 9 percent.What is the standard deviation of the stock's returns for the four-year period?

Kelly decided to accept the risk and purchased a high growth stock.Her returns for the past five years are 32 percent, 24 percent, -48 percent, 12 percent, and -9 percent, respectively.What is the standard deviation of these returns?

Which one of the following categories has the widest frequency distribution of returns for the period 1926-2014?

The standard deviation measures the _____ of a security's returns over time.

A stock has produced returns of 11.9 percent, 5.6 percent, 16.4 percent, and -4.2 percent over the past four years, respectively.What is the geometric average return?

One year ago, Jeni purchased 250 shares of TMO stock for $12,658.Today, she sold those shares for $52 per share.What is the capital gains yield on this investment if the dividend yield is 1.1 percent?

Over the past five years, a stock returned 8.4 percent, 8.7 percent, 3.2 percent, 1.5 percent, and 11.5 percent, respectively.What is the variance of these returns?

Home Grown Tomatoes stock returned 11.6 percent, 3.2 percent, 8.1 percent, 14.2, and 9.8 percent over the past five years, respectively.What is the arithmetic average return for this period?

Bandor Furniture pays a constant annual dividend.Last year, the dividend yield was 4.9 percent when the stock was selling for $43.50 per share.What is the current price of the stock if the current dividend yield is 4 percent?

The stock of Pepito Organic Foods is priced at $45 per share and has a dividend yield of 2.2 percent.The firm pays constant annual dividends.What is the amount of the next dividend per share?

A stock has had returns of 14 percent, -18 percent, 2 percent, 33 percent, 27 percent, and 6 percent over the last six years, respectively.What is the geometric return for this stock?

If the financial markets are efficient then:

Assume large-company stocks returned 12.1 percent on average over the past 88 years.The risk premium on these stocks was 8.6 percent and the inflation rate was 3.0 percent.What was the average nominal risk-free rate of return for those 88 years?

Introduction to Financial Management

Financial Statements, Taxes, and Cash Flow

Working With Financial Statements

Introduction to Valuation: the Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Equity Markets and Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Risk and Return

Cost of Capital

Leverage and Capital Structure

Dividends and Dividend Policy

Raising Capital

Short-Term Financial Planning

Working Capital Management

International Aspects of Financial Management

Filters

Exam 10: Some Lessons From Capital Market History

Which one of the following is the positive square root of the variance?

The stock of Arbitrage Training is priced at $37 per share and has a dividend yield of 2.8 percent.The firm pays constant annual dividends.What is the amount of the next dividend per share?

A stock has yielded returns of 9 percent, 16 percent, 18 percent, and -6 percent over the past four years, respectively.What is the standard deviation of these returns?

A bond has an average return of 11.2 percent and a standard deviation of 14.6 percent.What range of returns would you expect to see 68 percent of the time on this security?

Skyler Parts pays a constant annual dividend.Last year, the dividend yield was 3.75 percent when the stock was selling for $19.75 per share.What is the current price of the stock if the current dividend yield is 5 percent?

Over the last four years, a stock has had an arithmetic average return of 12.8 percent.Three of those four years produced returns of 22.6 percent, 15.2 percent, and -24.1 percent, respectively.What is the geometric average return for this four-year period?

A security produced returns of 11 percent, 7 percent, 9 percent, 13 percent, and -14 percent over the past five years, respectively.Based on these five years, what is the probability that this stock will earn more than 16.16 percent in any one given year?

A stock produced returns of 11 percent, 19 percent, and 2 percent over three of the past four years, respectively.The arithmetic average for the past four years is 9 percent.What is the standard deviation of the stock's returns for the four-year period?

Kelly decided to accept the risk and purchased a high growth stock.Her returns for the past five years are 32 percent, 24 percent, -48 percent, 12 percent, and -9 percent, respectively.What is the standard deviation of these returns?

Which one of the following categories has the widest frequency distribution of returns for the period 1926-2014?

The standard deviation measures the _____ of a security's returns over time.

A stock has produced returns of 11.9 percent, 5.6 percent, 16.4 percent, and -4.2 percent over the past four years, respectively.What is the geometric average return?

One year ago, Jeni purchased 250 shares of TMO stock for $12,658.Today, she sold those shares for $52 per share.What is the capital gains yield on this investment if the dividend yield is 1.1 percent?

Over the past five years, a stock returned 8.4 percent, 8.7 percent, 3.2 percent, 1.5 percent, and 11.5 percent, respectively.What is the variance of these returns?

Home Grown Tomatoes stock returned 11.6 percent, 3.2 percent, 8.1 percent, 14.2, and 9.8 percent over the past five years, respectively.What is the arithmetic average return for this period?

Bandor Furniture pays a constant annual dividend.Last year, the dividend yield was 4.9 percent when the stock was selling for $43.50 per share.What is the current price of the stock if the current dividend yield is 4 percent?

The stock of Pepito Organic Foods is priced at $45 per share and has a dividend yield of 2.2 percent.The firm pays constant annual dividends.What is the amount of the next dividend per share?

A stock has had returns of 14 percent, -18 percent, 2 percent, 33 percent, 27 percent, and 6 percent over the last six years, respectively.What is the geometric return for this stock?

If the financial markets are efficient then:

Assume large-company stocks returned 12.1 percent on average over the past 88 years.The risk premium on these stocks was 8.6 percent and the inflation rate was 3.0 percent.What was the average nominal risk-free rate of return for those 88 years?

Introduction to Financial Management

Financial Statements, Taxes, and Cash Flow

Working With Financial Statements

Introduction to Valuation: the Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Equity Markets and Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Risk and Return

Cost of Capital

Leverage and Capital Structure

Dividends and Dividend Policy

Raising Capital

Short-Term Financial Planning

Working Capital Management

International Aspects of Financial Management

Filters