Exam 10: Lessons From Market History

A stock has an expected rate of return of 8.3 percent and a standard deviation of 6.4 percent.Which one of the following best describes the probability that this stock will lose more than 4.50 percent in any one given year?

What are the arithmetic and geometric average returns (Answer in that order.)for a stock with annual returns of 4 percent,9 percent,−6 percent,and 18 percent?

A portfolio of small-company common stocks,as used in this course,is best described as the stocks of the firms which:

A stock had returns of 12 percent,6 percent,13 percent,−11 percent,and −2 percent over the past five years.What is the geometric average return for this time period?

Suppose you have $30,000 invested in the stock market and your banker comes to you and tries to get you to move that money into the bank's certificates of deposit (CDs).He explains that the CDs are 100 percent government insured and that you are taking unnecessary risks by being in the stock market.How would you respond?

Over the period of 1926 to 2017,the average rate of inflation was ________ percent.

The return pattern on your favorite stock has been 5.39 percent,8.26 percent,−12.04 percent,and 14.27 percent over the last four years.What are the average arithmetic and geometric rates of return?

The standard deviation of small-company stocks:

From November 2007 through January 2009,the S&P 500 Index lost approximately what percent of its value?

Which one of the following statements concerning the standard deviation is correct?

One year ago,you purchased 300 shares of IXC stock at a price of $22.05 per share,received $460 in dividends over the year,and today sold all your shares for $29.32 per share.What was your dividend yield?

The average compound return earned per year over a multi-year period is called the ________ average return.

Based on historical market performance,what can we conclude about the relationship between return and risk?

Which one of the following is a correct statement concerning the excess return?

Over the period of 1926 to 2017,small-company stocks had an average return of ________ percent.

You purchased 300 shares of stock at a price of $21.72 per share.Over the last year,you have received total dividend income of $210.What is the dividend yield?

Which country has the highest Sharpe ratio based on historical equity risk premiums and standard deviations of returns for the period 1900-2010?

One year ago,you purchased a stock at a price of $32.50.The stock pays quarterly dividends of $.40 per share.Today,the stock is worth $34.60 per share.What is the total dollar return per share to date from this investment?

A stock had annual returns of 7.63 percent,9.28 percent,−3.11 percent,and 15.09 percent for the past four years,respectively.What is the real arithmetic average rate of return for this period if inflation averaged 2.3 percent?

Of these countries,which one has the highest historical equity risk premium for the period 1900-2010?