Question 1

Which one of the following statements related to capital gains is correct?

Accepted Answer

A)  The capital gains yield includes only realized capital gains. 
B)  An increase in an unrealized capital gain will increase the capital gains yield. 
C)  The capital gains yield must be either positive or zero. 
D)  The capital gains yield is expressed as a percentage of a security's total return. 
E)  The capital gains yield represents the total return earned by an investor. 
A)  The capital gains yield includes only realized capital gains. 
B)  An increase in an unrealized capital gain will increase the capital gains yield. 
C)  The capital gains yield must be either positive or zero. 
D)  The capital gains yield is expressed as a percentage of a security's total return. 
E)  The capital gains yield represents the total return earned by an investor.

Question 2

One year ago, you purchased 100 shares of Best Wings stock at a price of $38.19 a share. The company pays an annual dividend of $.46 per share. Today, you sold for the shares for $37.92 a share. What is your total percentage return on this investment?

Accepted Answer

A)  2.62 percent 
B)  1.93 percent 
C)  2.72 percent 
D)  1.08 percent 
E)  .50 percent 
A)  2.62 percent 
B)  1.93 percent 
C)  2.72 percent 
D)  1.08 percent 
E)  .50 percent

Question 3

Over the past five years, a stock produced returns of 11 percent, 14 percent, 4 percent, −9 percent, and 5 percent. What is the probability that an investor in this stock will not lose more than 10 percent in any one given year?

Accepted Answer

A)  Greater than .5 but less than 1.0 percent 
B)  Greater than 1 percent but less than 2.5 percent 
C)  Greater than 2.5 percent but less than 16 percent 
D)  Greater than 84 percent but less than 97.5 percent 
E)  Greater than 95 percent 
A)  Greater than .5 but less than 1.0 percent 
B)  Greater than 1 percent but less than 2.5 percent 
C)  Greater than 2.5 percent but less than 16 percent 
D)  Greater than 84 percent but less than 97.5 percent 
E)  Greater than 95 percent

Question 4

The primary purpose of Blume's formula is to:

Accepted Answer

A)  compute an accurate historical rate of return. 
B)  determine a stock's true current value. 
C)  consider compounding when estimating a rate of return. 
D)  determine the actual real rate of return. 
E)  project future rates of return. 
A)  compute an accurate historical rate of return. 
B)  determine a stock's true current value. 
C)  consider compounding when estimating a rate of return. 
D)  determine the actual real rate of return. 
E)  project future rates of return.

Question 5

You are aware that your neighbor trades stocks based on confidential information he overhears at his workplace. This information is not available to the general public. This neighbor continually brags to you about the profits he earns on these trades. Given this, you would tend to argue that the financial markets are at best ________ form efficient.

Accepted Answer

A)  weak 
B)  semiweak 
C)  semistrong 
D)  strong 
E)  perfect 
A)  weak 
B)  semiweak 
C)  semistrong 
D)  strong 
E)  perfect

Question 6

Evidence seems to support the view that studying public information to identify mispriced stocks is:

Accepted Answer

A)  effective as long as the market is only semistrong form efficient. 
B)  effective provided the market is only weak form efficient. 
C)  ineffective. 
D)  effective only in strong form efficient markets. 
E)  ineffective only in strong form efficient markets. 
A)  effective as long as the market is only semistrong form efficient. 
B)  effective provided the market is only weak form efficient. 
C)  ineffective. 
D)  effective only in strong form efficient markets. 
E)  ineffective only in strong form efficient markets.

Question 7

The common stock of Air Express had annual returns of 11.7 percent, 8.8 percent, 16.7 percent, and −7.9 percent over the last four years, respectively. What is the standard deviation of these returns?

Accepted Answer

A)  8.29 percent 
B)  9.14 percent 
C)  11.54 percent 
D)  7.78 percent 
E)  10.66 percent 
A)  8.29 percent 
B)  9.14 percent 
C)  11.54 percent 
D)  7.78 percent 
E)  10.66 percent

Question 8

Which one of the following time periods is associated with low rates of inflation?

Accepted Answer

A)  1941-1942 
B)  1973-1974 
C)  2014-2015 
D)  1979-1980 
E)  1946-1947 
A)  1941-1942 
B)  1973-1974 
C)  2014-2015 
D)  1979-1980 
E)  1946-1947

Question 9

If the variability of the returns on large-company stocks were to decrease over the long-term, you would expect which one of the following as related to large-company stocks to occur as a result?

Accepted Answer

A)  Increase in the risk premium 
B)  Increase in the average long-term rate of return 
C)  Decrease in the 68 percent probability range of returns 
D)  Increase in the standard deviation 
E)  Increase in the geometric average rate of return 
A)  Increase in the risk premium 
B)  Increase in the average long-term rate of return 
C)  Decrease in the 68 percent probability range of returns 
D)  Increase in the standard deviation 
E)  Increase in the geometric average rate of return

Question 10

A stock had returns of 13 percent, 11 percent, 8 percent, 14 percent, −9 percent, and −5 percent over the past six years. What is the geometric average return for this time period?

Accepted Answer

A)  4.93 percent 
B)  4.67 percent 
C)  5.13 percent 
D)  5.39 percent 
E)  5.26 percent 
A)  4.93 percent 
B)  4.67 percent 
C)  5.13 percent 
D)  5.39 percent 
E)  5.26 percent

Question 11

Which one of the following categories of securities had the most volatile annual returns over the period 1926-2016?

Accepted Answer

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

Question 12

Last year, you purchased 400 shares of Analog stock for $12.92 a share. You have received a total of $136 in dividends and $4,301 in proceeds from selling the shares. What is your capital gains yield on this stock?

Accepted Answer

A)  9.09 percent 
B)  6.73 percent 
C)  −16.78 percent 
D)  −14.14 percent 
E)  −11.02 percent 
A)  9.09 percent 
B)  6.73 percent 
C)  −16.78 percent 
D)  −14.14 percent 
E)  −11.02 percent

Question 13

West Wind Tours stock is currently selling for $52.30 a share. The stock has a dividend yield of 2.48 percent. How much dividend income will you receive per year if you purchase 600 shares of this stock?

Accepted Answer

A)  $824.96 
B)  $836.20 
C)  $724.80 
D)  $762.00 
E)  $778.22 
A)  $824.96 
B)  $836.20 
C)  $724.80 
D)  $762.00 
E)  $778.22

Which one of the following statements related to capital gains is correct?

One year ago, you purchased 100 shares of Best Wings stock at a price of $38.19 a share. The company pays an annual dividend of $.46 per share. Today, you sold for the shares for $37.92 a share. What is your total percentage return on this investment?

Over the past five years, a stock produced returns of 11 percent, 14 percent, 4 percent, −9 percent, and 5 percent. What is the probability that an investor in this stock will not lose more than 10 percent in any one given year?

The primary purpose of Blume's formula is to:

Evidence seems to support the view that studying public information to identify mispriced stocks is:

The common stock of Air Express had annual returns of 11.7 percent, 8.8 percent, 16.7 percent, and −7.9 percent over the last four years, respectively. What is the standard deviation of these returns?

Which one of the following time periods is associated with low rates of inflation?

If the variability of the returns on large-company stocks were to decrease over the long-term, you would expect which one of the following as related to large-company stocks to occur as a result?

A stock had returns of 13 percent, 11 percent, 8 percent, 14 percent, −9 percent, and −5 percent over the past six years. What is the geometric average return for this time period?

Which one of the following categories of securities had the most volatile annual returns over the period 1926-2016?

Last year, you purchased 400 shares of Analog stock for $12.92 a share. You have received a total of $136 in dividends and $4,301 in proceeds from selling the shares. What is your capital gains yield on this stock?

West Wind Tours stock is currently selling for $52.30 a share. The stock has a dividend yield of 2.48 percent. How much dividend income will you receive per year if you purchase 600 shares of this stock?

Introduction to Corporate Finance

Financial Statements, Taxes, and Cash Flow

Working with Financial Statements

Long-Term Financial Planning and Growth

Introduction to Valuation: The Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Project Analysis and Evaluation

Return, Risk, and the Security Market Line

Cost of Capital

Raising Capital

Financial Leverage and Capital Structure Policy

Dividends and Payout Policy

Short Term Finance and Planning

Cash and Liquidity Management

Credit and Inventory Management

International Corporate Finance

Behavioral Finance: Implications for Financial Management

Enterprise Risk Management

Options and Corporate Finance

Option Valuation

Mergers and Acquisitions

Leasing

Filters

Exam 12: Some Lessons from Capital Market History

Which one of the following statements related to capital gains is correct?

One year ago, you purchased 100 shares of Best Wings stock at a price of $38.19 a share. The company pays an annual dividend of $.46 per share. Today, you sold for the shares for $37.92 a share. What is your total percentage return on this investment?

Over the past five years, a stock produced returns of 11 percent, 14 percent, 4 percent, −9 percent, and 5 percent. What is the probability that an investor in this stock will not lose more than 10 percent in any one given year?

The primary purpose of Blume's formula is to:

Evidence seems to support the view that studying public information to identify mispriced stocks is:

The common stock of Air Express had annual returns of 11.7 percent, 8.8 percent, 16.7 percent, and −7.9 percent over the last four years, respectively. What is the standard deviation of these returns?

Which one of the following time periods is associated with low rates of inflation?

If the variability of the returns on large-company stocks were to decrease over the long-term, you would expect which one of the following as related to large-company stocks to occur as a result?

A stock had returns of 13 percent, 11 percent, 8 percent, 14 percent, −9 percent, and −5 percent over the past six years. What is the geometric average return for this time period?

Which one of the following categories of securities had the most volatile annual returns over the period 1926-2016?

Last year, you purchased 400 shares of Analog stock for $12.92 a share. You have received a total of $136 in dividends and $4,301 in proceeds from selling the shares. What is your capital gains yield on this stock?

West Wind Tours stock is currently selling for $52.30 a share. The stock has a dividend yield of 2.48 percent. How much dividend income will you receive per year if you purchase 600 shares of this stock?

Introduction to Corporate Finance

Financial Statements, Taxes, and Cash Flow

Working with Financial Statements

Long-Term Financial Planning and Growth

Introduction to Valuation: The Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Project Analysis and Evaluation

Return, Risk, and the Security Market Line

Cost of Capital

Raising Capital

Financial Leverage and Capital Structure Policy

Dividends and Payout Policy

Short Term Finance and Planning

Cash and Liquidity Management

Credit and Inventory Management

International Corporate Finance

Behavioral Finance: Implications for Financial Management

Enterprise Risk Management

Options and Corporate Finance

Option Valuation

Mergers and Acquisitions

Leasing

Filters