Exam 4: Return and Risk

The risk-free rate is equal to the real rate of return plus

There is no limit to the increase in the true rate of interest as compounding becomes more frequent.

Congress considers a bill that would eliminate the mortgage interest deduction for individuals. For the housing industry, this is an example of

-Given a spreadsheet similar to the one shown in Table 1, the command to compute the internal rate of return would be

7 years ago, Nick invested $7,000. Today his investment is worth $11,500. The internal rate of return on this investment is

If a stock is purchased at the beginning of a year, a single dividend is paid at the end of the year and the stock is sold immediately after the dividend has been received. In this case

An investment produced annual rates of return of 4%, 8%, 14% and 6%, respectively, over the past four years. What is the standard deviation of these returns?

The internal rate of return is the correct method to use when an investor wants to determine an investment's average annual yield.