Question 1

What is the expected return from an asset having the following possible returns and associated probabilities?
$\begin{array}{cc} 
\text {Possible return} & \text {Probability} \
 25 \%  & 20 \%  \
 15 \% &  50 \% \
 5 \%  & 30 \% 
\end{array}$

Accepted Answer

A)  13.5%. 
B)  14%. 
C)  15%. 
D)  16.5%. 
A)  13.5%. 
B)  14%. 
C)  15%. 
D)  16.5%.

Question 2

If a person chooses to take $100 in cash instead of betting it to win $210 on the toss of a coin, that person is:

Accepted Answer

A)  risk averse. 
B)  risk neutral. 
C)  a risk seeker. 
D)  indifferent to risk. 
A)  risk averse. 
B)  risk neutral. 
C)  a risk seeker. 
D)  indifferent to risk.

Question 3

If you expect a market return of 10% and a risk-free rate of 5%, the required rate of return on an investment with a beta value of 0.5 is:

Accepted Answer

A)  5%. 
B)  7.5%. 
C)  10%. 
D)  12.5%. 
A)  5%. 
B)  7.5%. 
C)  10%. 
D)  12.5%.

Question 4

Given that a stock has generated returns of 6%, 18%, -5% and 20% over the last four years, the average annual return on this stock over the period was:

Accepted Answer

A)  9.75%. 
B)  10.50%. 
C)  12.25%. 
D)  39%. 
A)  9.75%. 
B)  10.50%. 
C)  12.25%. 
D)  39%.

Question 5

Beta is a measure of an asset's:

Accepted Answer

A)  total risk. 
B)  correlation with market returns. 
C)  systematic risk. 
D)  unsystematic risk. 
A)  total risk. 
B)  correlation with market returns. 
C)  systematic risk. 
D)  unsystematic risk.

What is the expected return from an asset having the following possible returns and associated probabilities? Possible return Probability 25\% 20\% 15\% 50\% 5\% 30\%

If a person chooses to take $100 in cash instead of betting it to win $210 on the toss of a coin, that person is:

If you expect a market return of 10% and a risk-free rate of 5%, the required rate of return on an investment with a beta value of 0.5 is:

Given that a stock has generated returns of 6%, 18%, -5% and 20% over the last four years, the average annual return on this stock over the period was:

Beta is a measure of an asset's:

Finance in Business

Time Value of Money, Financial Markets, the Reserve Bank of Australia and Interest Rates

Discounted Cash Flows and Valuation

Share Valuation and Bond Valuation

Capital Budgeting and Cash Flows

Cost of Capital and Working Capital Management

Capital Structure and Dividend Policy

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Exam 4: Risk and Return

What is the expected return from an asset having the following possible returns and associated probabilities? Possible return Probability 25\% 20\% 15\% 50\% 5\% 30\%

If a person chooses to take $100 in cash instead of betting it to win $210 on the toss of a coin, that person is:

If you expect a market return of 10% and a risk-free rate of 5%, the required rate of return on an investment with a beta value of 0.5 is:

Given that a stock has generated returns of 6%, 18%, -5% and 20% over the last four years, the average annual return on this stock over the period was:

Beta is a measure of an asset's:

Finance in Business

Time Value of Money, Financial Markets, the Reserve Bank of Australia and Interest Rates

Discounted Cash Flows and Valuation

Share Valuation and Bond Valuation

Capital Budgeting and Cash Flows

Cost of Capital and Working Capital Management

Capital Structure and Dividend Policy

Filters