Exam 5: Risk, Return, and the Historical Record

A year ago, you invested $10,000 in a savings account that pays an annual interest rate of 3%.What is your approximate annual real rate of return if the rate of inflation was 4% over the year?

If an investment provides a 3% return semi-annually, its effective annual rate is

If the Federal Reserve lowers the Fed Funds rate, ceteris paribus, the equilibrium levels of funds lent will __________, and the equilibrium level of real interest rates will ___________.

You have been given this probability distribution for the holding-period return for KMP stock: What is the expected standard deviation for KMP stock?

When a distribution is positively skewed,

A year ago, you invested $12,000 in an investment that produced a return of 18%.What is your approximate annual real rate of return if the rate of inflation was 2% over the year?

Over the past year, you earned a nominal rate of interest of 14% on your money.The inflation rate was 2% over the same period.The exact actual growth rate of your purchasing power was

Over the past year, you earned a nominal rate of interest of 12.5% on your money.The inflation rate was 2.6% over the same period.The exact actual growth rate of your purchasing power was

Skewness is a measure of

Other things equal, an increase in the government budget deficit

Over the past year, you earned a nominal rate of interest of 8% on your money.The inflation rate was 4% over the same period.The exact actual growth rate of your purchasing power was

You purchase a share of Boeing stock for $90.One year later, after receiving a dividend of $3, you sell the stock for $92.What was your holding-period return?

Which of the following statement(s) is(are) true? I) The real rate of interest is determined by the supply and demand for funds. II) The real rate of interest is determined by the expected rate of inflation. III) The real rate of interest can be affected by actions of the Fed. IV) The real rate of interest is equal to the nominal interest rate plus the expected rate of inflation.

"Bracket Creep" happens when

The holding-period return (HPR) on a share of stock is equal to

A year ago, you invested $2,500 in a savings account that pays an annual interest rate of 5.7%.What is your approximate annual real rate of return if the rate of inflation was 1.6% over the year?

You purchased a share of stock for $68.One year later, you received $3.00 as a dividend and sold the share for $74.50.What was your holding-period return?

When comparing investments with different horizons, the ____________ provides the more accurate comparison.

An investor purchased a bond 63 days ago for $980.He received $17 in interest and sold the bond for $987.What is the holding-period return on his investment?

Which of the following statement(s) is(are) true?