Exam 11: Risk and Return in Capital Markets

Greg purchased stock in Bear Stearns and Co. at a price of $88 per share one year ago. The company was acquired by JP Morgan at a price of $11 per share. What is Greg's return on his investment?

(Multiple Choice)

4.8/5

(80)

Question 41

Ford Motor Company had realized returns of 20%, 30%, 30%, and 20% over four quarters. What is the quarterly standard deviation of returns for Ford calculated from this sample?

(Multiple Choice)

5.0/5

(86)

Question 42

The average annual return for the S&P 500 from 1886 to 2006 is 5%, with a standard deviation of 15%. Based on these numbers, what is a 95% confidence interval for 2007's returns?

(Multiple Choice)

4.8/5

(79)

Question 43

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

(True/False)

5.0/5

(91)

Question 44

The geometric average annual return for a large capitalization stock portfolio is 10% for ten years and 6% per year for the next five years. The geometric average annual return for the entire 15 year period is ________.

(Multiple Choice)

4.8/5

(69)

Question 45

The average annual return over the period 1926-2009 for the S&P 500 is 12.8%, and the standard deviation of returns is 21.4%. Based on these numbers, what is a 67% confidence interval for 2010 returns?

(Multiple Choice)

4.8/5

(77)

Question 46

The risk premium of a stock is NOT affected by its ________.

(Multiple Choice)

4.7/5

(74)

Question 47

Independent risks can be diversified by holding a large number of uncorrelated assets with independent risks.

(True/False)

4.8/5

(89)

Question 48

Suppose you invested $93 in the Ishares High Yield Fund (HYG) a month ago. It paid a dividend of $0.53 today and then you sold it for $94. What was your dividend yield and capital gains yield on the investment?

(Multiple Choice)

4.7/5

(87)

Question 49

Two slot machines offer to double your money 3 times out of 5. Machine A takes $10 bets and Machine B takes $100 bets on each occasion. A risk-averse investor prefers to bet on ________.

(Multiple Choice)

4.8/5

(75)

Question 50

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

(True/False)

4.9/5

(96)

Question 51

Suppose you invested $60 in the Ishares Dividend Stock Fund (DVY) a month ago. It paid a dividend of $0.63 today and then you sold it for $65. What was your return on the investment?

(Multiple Choice)

4.9/5

(91)

Question 52

Ford Motor Company had realized returns of 10%, 20%, -10%, and -10% over four quarters. What is the quarterly standard deviation of returns for Ford?

(Multiple Choice)

4.9/5

(74)

Question 53

In the United States over the long term, small stocks have provided the highest return followed by the large stocks in the S&P 500.

(True/False)

4.8/5

(76)

Question 54

The risk premium of a security is determined by its risk and does not depend on its risk.

(Multiple Choice)

4.8/5

(81)

Question 55

The average annual return for the S&P 500 from 1886 to 2006 is 9.5%, with a standard deviation of 18%. Based on these numbers, what is a 95% confidence interval for 2007's returns?

(Multiple Choice)

4.9/5

(75)

Question 56

The risk that is linked across outcomes is called ________.

(Multiple Choice)

4.8/5

(71)

Question 57

Suppose you invested $59 in the Ishares Dividend Stock Fund (DVY) a month ago. It paid a dividend of 0.38 today and then you sold it for $66. What was your return on the investment?

(Multiple Choice)

4.7/5

(80)

Question 58

The excess return is the difference between the average return on a security and the average return for ________.

(Multiple Choice)

4.9/5

(80)

Question 59

Consider the following average annual returns: What is the excess return for corporate bonds?

(Multiple Choice)

4.9/5

(83)

Question 60

Showing 41 - 60 of 110

Exam 11: Risk and Return in Capital Markets

Greg purchased stock in Bear Stearns and Co. at a price of $88 per share one year ago. The company was acquired by JP Morgan at a price of $11 per share. What is Greg's return on his investment?

Ford Motor Company had realized returns of 20%, 30%, 30%, and 20% over four quarters. What is the quarterly standard deviation of returns for Ford calculated from this sample?

The average annual return for the S&P 500 from 1886 to 2006 is 5%, with a standard deviation of 15%. Based on these numbers, what is a 95% confidence interval for 2007's returns?

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

The geometric average annual return for a large capitalization stock portfolio is 10% for ten years and 6% per year for the next five years. The geometric average annual return for the entire 15 year period is ________.

The average annual return over the period 1926-2009 for the S&P 500 is 12.8%, and the standard deviation of returns is 21.4%. Based on these numbers, what is a 67% confidence interval for 2010 returns?

The risk premium of a stock is NOT affected by its ________.

Independent risks can be diversified by holding a large number of uncorrelated assets with independent risks.

Suppose you invested $93 in the Ishares High Yield Fund (HYG) a month ago. It paid a dividend of $0.53 today and then you sold it for $94. What was your dividend yield and capital gains yield on the investment?

Two slot machines offer to double your money 3 times out of 5. Machine A takes $10 bets and Machine B takes $100 bets on each occasion. A risk-averse investor prefers to bet on ________.

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

Suppose you invested $60 in the Ishares Dividend Stock Fund (DVY) a month ago. It paid a dividend of $0.63 today and then you sold it for $65. What was your return on the investment?

Ford Motor Company had realized returns of 10%, 20%, -10%, and -10% over four quarters. What is the quarterly standard deviation of returns for Ford?

In the United States over the long term, small stocks have provided the highest return followed by the large stocks in the S&P 500.

The risk premium of a security is determined by its ________ risk and does not depend on its ________ risk.

The average annual return for the S&P 500 from 1886 to 2006 is 9.5%, with a standard deviation of 18%. Based on these numbers, what is a 95% confidence interval for 2007's returns?

The risk that is linked across outcomes is called ________.

Suppose you invested $59 in the Ishares Dividend Stock Fund (DVY) a month ago. It paid a dividend of 0.38 today and then you sold it for $66. What was your return on the investment?

The excess return is the difference between the average return on a security and the average return for ________.

Consider the following average annual returns: What is the excess return for corporate bonds?

Corporate Finance and the Financial Manager

Introduction to Financial Statement Analysis

Time Value of Money: an Introduction

Time Value of Money: Valuing Cash Flow Streams

Interest Rates

Bonds

Stock Valuation

Investment Decision Rules

Fundamentals of Capital Budgeting

Stock Valuation: a Second Look

Systematic Risk and the Equity Risk Premium

The Cost of Capital

Raising Equity Capital

Debt Financing

Capital Structure

Payout Policy

Financial Modeling and Pro Forma Analysis

Working Capital Management

Short-Term Financial Planning

Option Applications and Corporate Finance

Mergers and Acquisitions

International Corporate Finance

Leasing

Insurance and Risk Management

Corporate Governance

Filters

The risk premium of a security is determined by its risk and does not depend on its risk.