Exam 10: Risk and Return in Capital Markets

You purchased Enron stock at a price of $30 per share.Its price was $20 after six months and the company declared bankruptcy at the end of the next six months.The realized return over the last year is:

There is an overall relationship between ________ and ________-larger stocks have a lower volatility overall.

Which of the following investments offered the lowest overall return over the past fifty years?

Your investment over one year yielded a capital gains yield of 5% and no dividend yield.If the sale price was $119 per share,what was the cost of the investment?

Use the table for the question(s) below. Consider the following realized annual returns: -The average annual return over the period 1926-2009 for the S&P 500 is 11.7%,and the standard deviation of returns is 20.5%.Based on these numbers,what is a 95% confidence interval for 2010 returns?

What are the two components of realized return from a stock investment?

Use the information for the question(s) below. Consider an economy with two types of firms, S and I. S firms always move together, but I firms move independently of each other. For both types of firms there is a 70% probability that the firm will have a 20% return and a 30% probability that the firm will have a -30% return. -The standard deviation for the return on an portfolio of 20 type I firms is closest to:

Tesla Motors stock had a realized return of 18%,4%,-12%,and -6% over four successive quarters.What is your annual realized return if you bought Tesla at the beginning of the year and sold it at the end of the year?

Greg purchased stock in Bear Stearns and Co.at a price of $89 per share.The company was acquired by JP Morgan at a price of $10 per share.What is Greg's return on his investment?

Use the information for the question(s) below. Consider an economy with two types of firms, S and I. S firms always move together, but I firms move independently of each other. For both types of firms there is a 70% probability that the firm will have a 20% return and a 30% probability that the firm will have a -30% return. -What is the expected return for an individual firm?

For large portfolios,investors should expect a higher return for higher volatility,but this does not hold true for individual stocks.

Ford Motor Company had realized returns of 10%,20%,20%,and 10% over four quarters.What is the quarterly standard deviation of returns for Ford calculated from this sample?

While ________ seems to be a reasonable measure of risk when evaluating a large portfolio,the ________ of an individual security does not explain the size of its average return.

Stocks have both diversifiable risk and undiversifiable risk,but only diversifiable risk is rewarded with higher expected returns.

The S&P TSX Composite index delivered annual returns of 17.61%,-8.71%,7.19% and 12.99% from 2010 to 2013.What was the average compound annual return per year?

Use the table for the question(s) below. Consider the following price and dividend data for Ford Motor Company: -Assume that you purchased Ford Motor Company stock at the closing price on December 31,2004 and sold it after the dividend had been paid at the closing price on January 26,2005.Your total return rate (yield)for this period is closest to:

Which of the following investments had the largest fluctuations in overall return over the past fifty years?

Explain why investors do not receive a risk premium for exposure to unsystematic risk.

Use the table for the question(s) below. Consider the following average annual returns: -What is the risk premium for Treasury bills?

When looking at investment portfolios historically,was there a pattern between returns and volatility?