Exam 11: Introduction to Risk, Return, and the Opportunity Cost of Capital

Industries that generally perform very well when the entire economy performs well and perform very badly when the economy performs badly are called:

Since about 1900,the standard deviation of annual returns on a portfolio of U.S.common stocks has been about:

Treasury bonds have provided a higher historical return than Treasury bills,which can be attributed to their:

What is the standard deviation of returns of a portfolio that produced returns of 10%,15%,25%,and 30%?

Risks that affect only a single firm are called:

When the annual rate of return on U.S.Treasury bills is historically high,investors expect the return on the stock market:

Cyclical stocks tend to perform well when other stocks are performing well also.

"Dow up 14.Story at 6:00." This means that:

What is the return to an investor who purchases a stock for $30,receives a $1.50 dividend at the end of the year,and then sells the share for $28.50?

The variance of an investment's returns is a measure of the:

The standard deviations of individual stocks are generally higher than the standard deviation of the market portfolio because the market portfolio:

The variance of a stock's returns can be calculated as the:

The appropriate opportunity cost of capital is the return that investors give up on alternative investments that:

The expected return on an investment includes compensation for both the time value of money and the risks assumed.

Stock A has an expected return of 15%; stock B has an expected return of 8%.What is the expected return on a portfolio is comprised of 60% of Stock A and 40% of Stock B?

For investment horizons greater than 20 years,long-term bonds traditionally have outperformed common stocks.

Companies that are exposed to the business cycle:

The market risk premium is the difference between the return on common stocks and the risk-free interest rate.

What nominal return was received by an investor when inflation averaged 3.46% and the real rate of return was 2.5%?

One estimate of the market risk premium is provided by the difference between the average historical return on common stocks and the risk-free interest rate.