Exam 5: Risk, Return, and the Historical Record

Over the past year, you earned a nominal rate of interest of 8% on your money.The inflation rate was 3.5% over the same period.The exact actual growth rate of your purchasing power was

The most common measure of loss associated with extremely negative returns is

Which of the following determine(s) the level of real interest rates? I) The supply of savings by households and business firms II) The demand for investment funds III) The government's net supply and/or demand for funds

If a portfolio had a return of 12%, the risk-free asset return was 4%, and the standard deviation of the portfolio's excess returns was 25%, the risk premium would be

If an investment provides a 0.78% return monthly, its effective annual rate is

When a distribution is negatively skewed,

You purchased a share of stock for $65.One year later, you received $2.37 as a dividend and sold the share for $63.What was your holding-period return?

Annual percentage rates (APRs) are computed using

________ is a risk measure that indicates vulnerability to extreme negative returns.

If the annual real rate of interest is 3.5%, and the expected inflation rate is 3.5%, the nominal rate of interest would be approximately

If an investment provides a 2% return semi-annually, its effective annual rate is

You purchased a share of stock for $20.One year later, you received $1 as a dividend and sold the share for $29.What was your holding-period return?

Toyota stock has the following probability distribution of expected prices one year from now: If you buy Toyota today for $55 and it will pay a dividend during the year of $4 per share, what is your expected holding-period return on Toyota?

You purchase a share of CAT stock for $90.One year later, after receiving a dividend of $4, you sell the stock for $97.What was your holding-period return?

Over the past year, you earned a nominal rate of interest of 3.6% on your money.The inflation rate was 3.1% over the same period.The exact actual growth rate of your purchasing power was

Which of the following measures of risk best highlights the potential loss from extreme negative returns?

If a portfolio had a return of 12%, the risk-free asset return was 4%, and the standard deviation of the portfolio's excess returns was 25%, the Sharpe measure would be

If an investment provides a 1.25% return quarterly, its effective annual rate is

If the annual real rate of interest is 2.5%, and the expected inflation rate is 3.7%, the nominal rate of interest would be approximately

Historical records regarding return on stocks, Treasury bonds, and Treasury bills between 1926 and 2015 show that