Exam 9: Characterizing Risk and Return

If you own 400 shares of Air Line Inc. at $44.50, 500 shares of BuyRite at $52.90, and 100 shares of MotorCity at $9.25, what are the portfolio weights of each stock?

Which of the following statements is correct?

The following table shows your stock positions at the beginning of the year, the dividends that each stock paid during the year, and the stock prices at the end of the year. What is your portfolio percentage return? Company Shares Beginning of Year Price Dividend per Share End of Year Price 100 \ 25.00 \ 1.00 \ 24.00 200 \ 14.00 \ 0.75 \ 15.25 400 \ 8.00 \ 10.00 200 \ 3.00 \ 0.50 \ 3.50

Rank the following three stocks by their risk-return relationship, best to worst. Rail Haul has an average return of 10 percent and standard deviation of 15 percent. The average return and standard deviation of Idol Staff are 15 percent and 25 percent; and of Poker-R-Us are 12 percent and 35 percent.

Which of the following is defined as the volatility of an investment, which includes firm specific risk as well as market risk?

Sharif's portfolio generated returns of 12 percent, 15 percent, −15 percent, 19 percent, and −12 percent over five years. What was his average return over this period?

Which of these is the term for portfolios with the highest return possible for each risk level?

The past five monthly returns for PG Company are 3.25 percent, −1.45 percent, 4.35 percent, 6.49 percent, and 3.75 percent. What is the average monthly return?

MedTech Corp. stock was $50.95 per share at the end of last year. Since then, it paid a $0.45 per share dividend. The stock price is currently $62.50. If you owned 500 shares of MedTech, what was your percent return?

Which of these is defined as a combination of investment assets held by an investor?

Rx Corp. stock was $60.00 per share at the end of last year. Since then, it paid a $1.00 per share dividend last year. The stock price is currently $62.50. If you owned 400 shares of Rx, what was your percent return?

The past three monthly returns for Kohl's are 2.25 percent, −1.54 percent, and 1.35 percent. What is the average monthly return?

TechNo stock was $25 per share at the end of last year. Since then, it paid a $1.50 per share dividend last year. The stock price is currently $23. If you owned 300 shares of TechNo, what was your percent return?

We commonly measure the risk-return relationship using which of the following?

Which of the following makes this a true statement: The shape of the efficient frontier implies that

Which of the following is an index that tracks 500 companies, which allows for a great deal of diversification?

From 1950 to 2007, the average return in the stock market, as measured by the S&P 500, was 13.2 percent and a standard deviation of 17 percent. Given this information, which of the following statements is correct?

You have $15,040 to invest. You want to purchase shares of Company A at $42.50, Company B at $51.50, and Company F at $9.75. How many shares of each company should you purchase so that your portfolio consists of 20 percent Company A, 40 percent Company B, and 40 percent Company F? Report only whole stock shares.

Consider the following annual returns of Estee Lauder and Lowe's Companies: Estee Lowe's Lauder Companies 2006 20.4\% -6.0\% 2005 -26.0\% 16.1\% 2004 17.6\% 14.2\% 2003 49.9\% 48.0\% 2002 -16.\%/4 -19.0\% Compute each stock's average return, standard deviation, and coefficient of variation.

Jane Adams invests all her money in the stock of one firm. Which of the following must be true?