Exam 10: Risk and Return in Capital Markets

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?

The S&P TSX Composite index delivered annual returns of 10.55%,-8.32%,21.08% and 9.10% from 2014 to 2017.What is a 95% confidence interval for the 2014 return?

The average annual return over the period 1886-2006 for stocks that comprise the S&P 500 is 12%,and the standard deviation of returns is 20%.Based on these numbers,what is a 95% confidence interval for 2007 returns?

The average annual return over the period 1886-2006 for stocks that comprise the S&P 500 is 10%,and the standard deviation of returns is 20%.Based on these numbers,what is a 95% confidence interval for 2007 returns?

Historical evidence on the returns of large portfolios of stock and bonds shows that investments with higher volatility have rewarded investors with higher returns.

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

A portfolio of stocks where each stock has a large component of independent risk benefits when such stocks are held in a portfolio,because the independent risks are averaged out.This is also referred to as diversification of risks.

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?

Investors demand a higher return for investments that have larger fluctuations in values because:

The S&P TSX Composite index delivered annual returns of 10.55%,-8.32%,21.08% and 9.10% from 2014 to 2017.If you invested $10,000 in the index at the beginning of 2010,what amount would your investment have been worth at the end of 2013?

Apple computer's stock price jumped when it announced that its revenue had increased because of the successful launch of iPhone and the increased sales of Macintosh computers.This is an example of

Historically,stocks have delivered a ________ return on average compared to Treasury bills but have experienced ________ fluctuations in values.

In Canada over the long term,small stocks on the S&P/TSX have provided the highest return followed by long-term Government of Canada bonds.

If a stock pays dividends at the end of each quarter,with realized returns of R₁,R₂,R₃,and R₄ each quarter,then the annual realized return is calculated as:

Is volatility a reasonable measure of risk when evaluating the investment in a single stock?

The standard deviation for the return on an portfolio of 20 type I firms is closest to:

A stock whose return does not depend on overall economic conditions has a low systematic risk.

Your investment over one year yielded a capital gains yield of 7% and a dividend yield of 4%.If the sale price was $86 per share,what was the cost of the investment?

What is the expected return for an individual firm?

On average,stocks have delivered higher returns than bonds in the long run.