Question 1

In 2008,the S&P 500 index

Accepted Answer

A) declined in value every month. 
B) declined almost 17 percent in 1 month. 
C) increased in value during 2 months. 
D) never increased by more than 2 percent in any 1 month. 
E) increased in value during the first 3 months. 
A) declined in value every month. 
B) declined almost 17 percent in 1 month. 
C) increased in value during 2 months. 
D) never increased by more than 2 percent in any 1 month. 
E) increased in value during the first 3 months.

Question 2

One year ago,Aimee purchased 300 shares of stock at a price of $21.39 per share.Over the last year,she received total dividend income of $69.What is the dividend yield?

Accepted Answer

A) 2)20% 
B) 1)08% 
C) 2)47% 
D) 0)65% 
E) 2)14% 
A) 2)20% 
B) 1)08% 
C) 2)47% 
D) 0)65% 
E) 2)14%

Question 3

Winslow stock is currently selling for $39 a share.The stock has a dividend yield of 2.3 percent.How much dividend income will you receive per year if you purchase 400 shares of this stock?

Accepted Answer

A) $248.80 
B) $390.47 
C) 358.80 
D) $239.50 
E) $360.00 
A) $248.80 
B) $390.47 
C) 358.80 
D) $239.50 
E) $360.00

Question 4

One year ago,you purchased a stock at a price of $47.26 a share.Today,you sold the stock and realized a total return of 9.8 percent.Your capital gain was $3.68 a share.What was your dividend yield on this stock?

Accepted Answer

A) 1)25% 
B) 1)85% 
C) 2)01% 
D) 1)75% 
E) 1)35% 
A) 1)25% 
B) 1)85% 
C) 2)01% 
D) 1)75% 
E) 1)35%

Question 5

A stock had returns of 13 percent,8 percent,1 percent,and −9 percent annually for the past 4 years.What is the mean and standard deviation of these returns?

Accepted Answer

A) 4)33%;9.54% 
B) 4)33%;11.08% 
C) 3)25%;9.54% 
D) 3)25%;13.22% 
E) 3)25%;11.08% 
A) 4)33%;9.54% 
B) 4)33%;11.08% 
C) 3)25%;9.54% 
D) 3)25%;13.22% 
E) 3)25%;11.08%

Question 6

GLM stock provided annual returns of 9.9 percent,8.2 percent,−6.7 percent,4.5 percent,and 7.1 percent over the last 5 years.What is the geometric average rate of return?

Accepted Answer

A) 6)03% 
B) 4)42% 
C) 6)69% 
D) 5)48% 
E) 5)56% 
A) 6)03% 
B) 4)42% 
C) 6)69% 
D) 5)48% 
E) 5)56%

Question 7

For the period 1926 to 2015,large-company stocks had a standard deviation of

Accepted Answer

A) 20 percent. 
B) 6 percent. 
C) 13 percent. 
D) 27 percent. 
E) 10 percent. 
A) 20 percent. 
B) 6 percent. 
C) 13 percent. 
D) 27 percent. 
E) 10 percent.

Question 8

The geometric average is probably best applied to ________ performance.

Accepted Answer

A) past 
B) future 
C) both past and future 
D) neither past nor future 
E) estimated 
A) past 
B) future 
C) both past and future 
D) neither past nor future 
E) estimated

Question 9

The standard deviation for a set of stock returns can be calculated as the

Accepted Answer

A) variance squared. 
B) positive square root of the variance. 
C) positive square root of the average return. 
D) average return divided by N minus one,where N is the number of returns. 
E) average squared difference between the actual return and the average return. 
A) variance squared. 
B) positive square root of the variance. 
C) positive square root of the average return. 
D) average return divided by N minus one,where N is the number of returns. 
E) average squared difference between the actual return and the average return.

Question 10

A stock had returns of 7 percent,7 percent,7 percent,and 7 percent annually over the past 4 years.What is the geometric average return for this time period?

Accepted Answer

A) 6)875% 
B) 7% 
C) 6)929% 
D) 9)998% 
E) 9)441% 
A) 6)875% 
B) 7% 
C) 6)929% 
D) 9)998% 
E) 9)441%

Question 11

Eight months ago,Isaac purchased 500 shares of stock at a price of $36.20 a share.To date,he has received two quarterly dividends of $.46 a share each.If he sells his shares at the current price of $36.44 a share,what will be his holding period percentage return?

Accepted Answer

A) .55% 
B) 1.01% 
C) 3.20% 
D) 2.78% 
E) 2.40% 
A) .55% 
B) 1.01% 
C) 3.20% 
D) 2.78% 
E) 2.40%

Question 12

Assume inflation averaged 1.2 percent during a period in which U.S.Treasury bills earned 1.3 percent.What was the rate of return on large-company stocks if the risk premium on those stocks was 6.8 percent for the period?

Accepted Answer

A) 8)1% 
B) 8)0% 
C) 7)9% 
D) 9)3% 
E) 9)2% 
A) 8)1% 
B) 8)0% 
C) 7)9% 
D) 9)3% 
E) 9)2%

Question 13

What conclusion should you draw from the performance of stocks and bonds over the period 1926 to 2015?

Accepted Answer

A) Bonds have greater volatility than stocks. 
B) Stock returns have a lower standard deviation than bond returns. 
C) In any year,stocks will outperform bonds. 
D) Stock returns have a smaller risk premium than bond returns. 
E) Stocks are riskier than bonds. 
A) Bonds have greater volatility than stocks. 
B) Stock returns have a lower standard deviation than bond returns. 
C) In any year,stocks will outperform bonds. 
D) Stock returns have a smaller risk premium than bond returns. 
E) Stocks are riskier than bonds.

Question 14

Deltona stock sold for $52.84 a share 1 year ago and pays an annual dividend of $3.20.What does the stock price need to be today for the annual capital gain to be 6.8 percent?

Accepted Answer

A) $53.23 
B) $49.25 
C) $56.43 
D) $48.63 
E) $54.18 
A) $53.23 
B) $49.25 
C) $56.43 
D) $48.63 
E) $54.18

Question 15

If you examine the U.S.stock market risk premium by extending the 1926 to 2015 time period backwards in time to 1802 (given the available information),the risk premium

Accepted Answer

A) decreases to 5.2 percent. 
B) increases to 7.6 percent. 
C) decreases to 3.9 percent. 
D) increases to 7.1 percent. 
E) decreases to 6.3 percent. 
A) decreases to 5.2 percent. 
B) increases to 7.6 percent. 
C) decreases to 3.9 percent. 
D) increases to 7.1 percent. 
E) decreases to 6.3 percent.

Question 16

What are the arithmetic and geometric average returns for a stock with annual returns of 14.9 percent,14.6 percent,−2.8 percent,and 9.7 percent?

Accepted Answer

A) 9)100%;8.673% 
B) 8)882%;8.854% 
C) 9)100%;8.771% 
D) 8)897%;8.854% 
E) 9)100%;8.854% 
A) 9)100%;8.673% 
B) 8)882%;8.854% 
C) 9)100%;8.771% 
D) 8)897%;8.854% 
E) 9)100%;8.854%

Question 17

What are the arithmetic and geometric average returns for a stock with annual returns of 6.2 percent,12.8 percent,−7.7 percent,and 9.4 percent?

Accepted Answer

A) 5)175%;5.028% 
B) 6)256%;4.892% 
C) 5)175%;4.873% 
D) 6)256%;5.028% 
E) 6)900%;4.873% 
A) 5)175%;5.028% 
B) 6)256%;4.892% 
C) 5)175%;4.873% 
D) 6)256%;5.028% 
E) 6)900%;4.873%

Question 18

Which one of these statements is correct?

Accepted Answer

A) Treasury bills outperformed inflation every year during the period 1926-2015. 
B) Small-company stocks outperformed large-company stocks every year during the period 1926-2015. 
C) On an annual basis,small-company stocks had more consistent rates of return than did large-company stocks for the period 1926-2015. 
D) The inflation rate has been positive every year during the period 1926-2015. 
E) During the 1930s (Great Depression),long-term government bonds produced a relatively stable rate of return relative to large-company stocks. 
A) Treasury bills outperformed inflation every year during the period 1926-2015. 
B) Small-company stocks outperformed large-company stocks every year during the period 1926-2015. 
C) On an annual basis,small-company stocks had more consistent rates of return than did large-company stocks for the period 1926-2015. 
D) The inflation rate has been positive every year during the period 1926-2015. 
E) During the 1930s (Great Depression),long-term government bonds produced a relatively stable rate of return relative to large-company stocks.

Question 19

How did long-term U.S.Treasury bonds perform in 2008?

Accepted Answer

A) Decreased by more than 15 percent 
B) Decreased between 5 and 15 percent 
C) Changed between -5 and +5 percent 
D) Increased between 5 and 15 percent 
E) Increased more than 15 percent 
A) Decreased by more than 15 percent 
B) Decreased between 5 and 15 percent 
C) Changed between -5 and +5 percent 
D) Increased between 5 and 15 percent 
E) Increased more than 15 percent

Question 20

The histograms of the returns on large-company and small-company stocks for the period 1926 to 2015 show that

Accepted Answer

A) large-company stocks never lost more than 20 percent in any one year. 
B) 1945 was the best-performing year for both large-company and small-company stocks. 
C) small-company stocks most commonly return 30 to 40 percent. 
D) small-company stocks are more volatile than large-company stocks. 
E) large-company stocks are riskier than small-company stocks. 
A) large-company stocks never lost more than 20 percent in any one year. 
B) 1945 was the best-performing year for both large-company and small-company stocks. 
C) small-company stocks most commonly return 30 to 40 percent. 
D) small-company stocks are more volatile than large-company stocks. 
E) large-company stocks are riskier than small-company stocks.

Exam 10: Risk Amcq Return: Lessons From Market History

In 2008,the S&P 500 index

One year ago,Aimee purchased 300 shares of stock at a price of $21.39 per share.Over the last year,she received total dividend income of $69.What is the dividend yield?

Winslow stock is currently selling for $39 a share.The stock has a dividend yield of 2.3 percent.How much dividend income will you receive per year if you purchase 400 shares of this stock?

One year ago,you purchased a stock at a price of $47.26 a share.Today,you sold the stock and realized a total return of 9.8 percent.Your capital gain was $3.68 a share.What was your dividend yield on this stock?

A stock had returns of 13 percent,8 percent,1 percent,and −9 percent annually for the past 4 years.What is the mean and standard deviation of these returns?

GLM stock provided annual returns of 9.9 percent,8.2 percent,−6.7 percent,4.5 percent,and 7.1 percent over the last 5 years.What is the geometric average rate of return?

For the period 1926 to 2015,large-company stocks had a standard deviation of

The geometric average is probably best applied to ________ performance.

The standard deviation for a set of stock returns can be calculated as the

A stock had returns of 7 percent,7 percent,7 percent,and 7 percent annually over the past 4 years.What is the geometric average return for this time period?

Eight months ago,Isaac purchased 500 shares of stock at a price of $36.20 a share.To date,he has received two quarterly dividends of $.46 a share each.If he sells his shares at the current price of $36.44 a share,what will be his holding period percentage return?

Assume inflation averaged 1.2 percent during a period in which U.S.Treasury bills earned 1.3 percent.What was the rate of return on large-company stocks if the risk premium on those stocks was 6.8 percent for the period?

What conclusion should you draw from the performance of stocks and bonds over the period 1926 to 2015?

Deltona stock sold for $52.84 a share 1 year ago and pays an annual dividend of $3.20.What does the stock price need to be today for the annual capital gain to be 6.8 percent?

If you examine the U.S.stock market risk premium by extending the 1926 to 2015 time period backwards in time to 1802 (given the available information),the risk premium

What are the arithmetic and geometric average returns for a stock with annual returns of 14.9 percent,14.6 percent,−2.8 percent,and 9.7 percent?

What are the arithmetic and geometric average returns for a stock with annual returns of 6.2 percent,12.8 percent,−7.7 percent,and 9.4 percent?

Which one of these statements is correct?

How did long-term U.S.Treasury bonds perform in 2008?

The histograms of the returns on large-company and small-company stocks for the period 1926 to 2015 show that

Introduction to Corporate Finance

Financial Statements AMCQ Cash Flow

Financial Statements Analysis Amcq Financial Models

Discounted Cash Flow Valuation

Interest Rates AMCQ Bomcq Valuation

Stock Valuation

Net Present Value AMCQ Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, AMCQ Capital Budgeting

Return Amcq Risk: the Capital Asset Pricing Model Capm

Risk, cost of Capital, AMCQ Valuation

Efficient Capital Markets Amcq Behavioral Challenges

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Dividemcqs AMCQ Other Payouts

Options Amcq Corporate Finance

Short-Term Finance Amcq Planning

Raising Capital

International Corporate Finance

Mergers Amcq Acquisitions Web Only

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