Exam 12: Some Lessons from Capital Market History

The U.S. Securities and Exchange Commission periodically charges individuals with insider trading and claims those individuals have made unfair profits. Given this, you would be most apt to argue that the markets are less than ________ form efficient.

Six months ago, you purchased 300 shares of stock in Global Trading at a price of $26.19 a share. The stock pays a quarterly dividend of $.12 a share. Today, you sold all of your shares for $27.11 per share. What is the total amount of your dividend income on this investment?

Which of the following yields on a stock can be negative?

Individual investors who continually monitor the financial markets seeking mispriced securities:

Small-company stocks, as the term is used in the textbook, are best defined as the:

Which form of market efficiency would most likely offer the greatest profit potential to an outstanding professional stock analyst?

The average annual return on small-company stocks was about ________ percent greater than the average annual return on large-company stocks over the period 1926-2016.

A stock had returns of 5 percent, 14 percent, 11 percent, −8 percent, and 6 percent over the past five years. What is the standard deviation of these returns?

Which one of the following statements is correct based on the historical record for the period 1926-2016?

You find a certain stock that had returns of 8 percent, −3 percent, 12 percent, and 17 percent for four of the last five years. The average return of the stock for the past five-year period was 6 percent. What is the standard deviation of the stock's returns for the five-year period?

What is the amount of the risk premium on a U.S. Treasury bill if the risk-free rate is 3.1 percent, the inflation rate is 2.6 percent, and the market rate of return is 7.4 percent?

You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 8 percent, −5 percent, 16 percent, 12 percent, and 8 percent. What is the variance of these returns?

Suppose a stock had an initial price of $76 per share, paid a dividend of $1.42 per share during the year, and had an ending share price of $81. What was the capital gains yield?

A stock had annual returns of 5.3 percent, −2.7 percent, 16.2 percent, and 13.6 percent over the past four years. Which one of the following best describes the probability that this stock will produce a return of 20 percent or more in a single year?

The excess return is computed as the:

Efficient financial markets fluctuate continuously because:

A stock had annual returns of 11.3 percent, 9.8 percent, −7.3 percent, and 14.6 percent for the past four years. Based on this information, what is the 95 percent probability range of returns for any one given year?

What was the average rate of inflation over the period of 1926-2016?

What is the probability that small-company stocks will produce an annual return that is more than one standard deviation below the average?

Which one of the following categories of securities had the highest average annual return for the period 1926-2016?