Exam 1: A Brief History of Risk and Return

You purchased a stock for $29.40 a share,received a dividend of $0.72 per share,and sold the stock after one year for $31.30 a share.What was your dividend yield on this investment?

The wider the distribution of an investment's returns over time,the _____ the expected average rate of return and the ______ the expected volatility of those returns.

You have been researching a company and have estimated that the firm's stock will sell for $44 a share one year from now.You also estimate the stock will have a dividend yield of 2.18 percent. How much are you willing to pay per share today to purchase this stock if you desire a total return of 15 percent on your investment?

The additional return earned for accepting risk is called the:

The average risk premium on long-term corporate bonds for the period 1926-2012 was:

An asset had returns of 6.8,5.4,3.6,-4.2,and -1.3 percent,respectively,over the past five years. What is the variance of these returns?

Which one of the following should be used as the mean return when you are defining the normal distribution of an investment's annual rates of return?

We have studied three different "average return measures" - the arithmetic average return,the geometric average return and the dollar-weighted average return.Briefly outline what information each metric provides.

Based on the period of 1926-2012,the risk premium for small-company stocks averaged:

An asset had annual returns of 13,10,-14,3,and 36 percent,respectively,for the past five years. What is the standard deviation of these returns?

When the total return on an investment is expressed on a per-year basis it is called the:

The geometric return on an asset over the past 12 years has been 13.47 percent.The arithmetic return over the same period was 13.86 percent.What is the best estimate of the average return on this asset over the next 5 years?

You have studied the historical returns and risks of various securities over the period of 1926-2012. Describe the historical returns and risks associated with bonds as compared to stocks over that time period.

Which one of the following had the narrowest bell curve for the period 1926-2012?

The standard deviation is a measure of:

Jeremy owns a stock that has historically returned 7.5 percent annually with a standard deviation of 10.2 percent.There is only a 0.5 percent chance that the stock will produce a return greater than _____ percent in any one year.

Christine owns a stock that dropped in price from $38.70 to $34.10 over the past year.The dividend yield on that stock is 1.4 percent.What is her total return on this investment for the year?

The mean plus or minus one standard deviation defines the _____ percent probability range of a normal distribution.

For the period 1926-2012,small-cap stocks outperformed large-cap stocks by a significant amount. Given this,why do investors still purchase large-cap stocks?

Jason owned a stock for four months and earned an annualized rate of return of 11 percent. What was the holding period return?