Question 1

A symmetric, bell-shaped frequency distribution that is completely deﬁned by its mean and standard deviation is the _____ distribution.

Accepted Answer

A) gamma 
B) Poisson 
C) bi-modal 
D) normal 
E) uniform 
A) gamma 
B) Poisson 
C) bi-modal 
D) normal 
E) uniform D

Question 2

A capital gain occurs when:

Accepted Answer

A) the selling price is less than the purchase price. 
B) the purchase price is less than the selling price. 
C) there is no dividend paid. 
D) there is no income component of return. 
E) Never, as they can not exist. 
A) the selling price is less than the purchase price. 
B) the purchase price is less than the selling price. 
C) there is no dividend paid. 
D) there is no income component of return. 
E) Never, as they can not exist. B

Question 3

What are the arithmetic and geometric average returns for a share with annual returns of 4%, 9%, -6%, and 18%?

Accepted Answer

A) 5.89%; 6.25% 
B) 6.25%; 5.89% 
C) 6.25%; 8.33% 
D) 8.3%; 5.89% 
E) 8.3%; 6.25% 
A) 5.89%; 6.25% 
B) 6.25%; 5.89% 
C) 6.25%; 8.33% 
D) 8.3%; 5.89% 
E) 8.3%; 6.25% B

Question 4

Today, you sold 200 shares of SLG plc.Your total return on these shares is 12.5%.You purchased the shares one year ago at a price of £28.50 a share.You have received a total of £280 in dividends
Over the course of the year.What is your capital gains yield on this investment?

Accepted Answer

A) 4.80% 
B) 5.00% 
C) 6.67% 
D) 7.59% 
E) 11.67% 
A) 4.80% 
B) 5.00% 
C) 6.67% 
D) 7.59% 
E) 11.67%

Question 5

You bought 100 shares at £20 each.At the end of the year, you received a total of £400 in dividends, and your equity was worth £2,500 total.What was total capital gain and total return?

Accepted Answer

A) £400; £500 
B) £400; £900 
C) £500; £900 
D) £900; £2,500 
E) None of the above. 
A) £400; £500 
B) £400; £900 
C) £500; £900 
D) £900; £2,500 
E) None of the above.

Question 6

Kids Toys plc has had total returns over the past ﬁve years of 0%, 7%, -2%, 10%, and 12%.What was the arithmetic average return on this equity?

Accepted Answer

A) 5.40% 
B) 5.50% 
C) 6.15% 
D) 6.33% 
E) 6.75% 
A) 5.40% 
B) 5.50% 
C) 6.15% 
D) 6.33% 
E) 6.75%

Question 7

You purchased 200 shares at a price of £36.72 each.Over the last year, you have received total dividend income of £322.What is the dividend yield?

Accepted Answer

A) 3.2% 
B) 4.4% 
C) 6.8% 
D) 9.2% 
E) 11.4% 
A) 3.2% 
B) 4.4% 
C) 6.8% 
D) 9.2% 
E) 11.4%

Question 8

Six months ago, you purchased 1,200 shares of ABC plc for €21.20 a share.You have received dividend payments equal to €.60 a share.Today, you sold all of your shares for €22.20 a share.
What is your total monetary return on this investment?

Accepted Answer

A) €720 
B) €1,200 
C) €1,440 
D) €1,920 
E) €3,840 
A) €720 
B) €1,200 
C) €1,440 
D) €1,920 
E) €3,840

Question 9

You just sold 200 shares of Langley at a price of £38.75 a share.Last year you paid £41.50 a share to buy this equity.Over the course of the year, you received dividends totaling £1.64 per share.What
Is your capital gain on this investment?

Accepted Answer

A) -£550 
B) -£222 
C) -£3 
D) £550 
E) £878 
A) -£550 
B) -£222 
C) -£3 
D) £550 
E) £878

Question 10

A share had returns of 8%, 39%, 11%, and -24% for the past four years.Which one of the following best describes the probability that this share will NOT lose more than 43% in any one given year?

Accepted Answer

A) 84.0% 
B) 95.0% 
C) 97.5% 
D) 99.0% 
E) 99.5% 
A) 84.0% 
B) 95.0% 
C) 97.5% 
D) 99.0% 
E) 99.5%

Question 11

You purchased 300 shares of Deltona for £44.90 a share.You have received a total of £630 in dividends and £14,040 in proceeds from selling the shares.What is your capital gains yield?

Accepted Answer

A) 4.06% 
B) 4.23% 
C) 4.68% 
D) 8.55% 
E) 8.91% 
A) 4.06% 
B) 4.23% 
C) 4.68% 
D) 8.55% 
E) 8.91%

Question 12

A portfolio of large company shares would contain which one of the following types of securities?

Accepted Answer

A) Equity of the ﬁrms which represent the smallest 20% of the companies. 
B) Government treasury bills. 
C) Long-term corporate bonds. 
D) Equities of ﬁrms included in the FTSE 100 index. 
E) Long-term government bonds. 
A) Equity of the ﬁrms which represent the smallest 20% of the companies. 
B) Government treasury bills. 
C) Long-term corporate bonds. 
D) Equities of ﬁrms included in the FTSE 100 index. 
E) Long-term government bonds.

Question 13

An equity had returns of 8%, -2%, 4%, and 16% over the past four years.What is the standard deviation of this equity for the past four years?

Accepted Answer

A) 6.3% 
B) 6.6% 
C) 7.1% 
D) 7.5% 
E) 7.9% 
A) 6.3% 
B) 6.6% 
C) 7.1% 
D) 7.5% 
E) 7.9%

Question 14

The standard deviation for a set of equity returns can be calculated as the:

Accepted Answer

A) positive square root of the average return. 
B) average squared difference between the actual return and the average return. 
C) positive square root of the variance. 
D) average return divided by N minus one, where N is the number of returns. 
E) variance squared. 
A) positive square root of the average return. 
B) average squared difference between the actual return and the average return. 
C) positive square root of the variance. 
D) average return divided by N minus one, where N is the number of returns. 
E) variance squared.

Question 15

You have a sample of returns observations for the Malta Stock Fund.The 4 returns are 7.25%, 5.6%, 12.5%, 1.0%.What is the average return and variance of these returns?

Accepted Answer

A) 6.50%; 16.9% 
B) 6.60%; 0.23% 
C) 6.60%; 4.75% 
D) 26.35%; 67.6% 
E) None of the above. 
A) 6.50%; 16.9% 
B) 6.60%; 0.23% 
C) 6.60%; 4.75% 
D) 26.35%; 67.6% 
E) None of the above.

Question 16

What are the arithmetic and geometric average returns for a share with annual returns of 21%, 8%, -32%, 41%, and 5%?

Accepted Answer

A) 5.6%; 8.6% 
B) 5.6%; 6.3% 
C) 8.6%; 5.6% 
D) 8.6%; 8.6% 
E) 8.6%; 6.3% 
A) 5.6%; 8.6% 
B) 5.6%; 6.3% 
C) 8.6%; 5.6% 
D) 8.6%; 8.6% 
E) 8.6%; 6.3%

Question 17

From 1926 to 2005, the total annual returns on large company US ordinary shares averaged 12.4%, small company shares averaged 17.5%, long-term government bonds averaged 5.8% and Treasury
Bills averaged 3.8%.What was the average risk premium earned by long-term government bonds
And small company shares respectively during that period of time?

Accepted Answer

A) 1.8%; 13.3% 
B) 2.0%; 13.7% 
C) 4.4%; 11.9% 
D) 9.5%; 1.8% 
E) None of the above. 
A) 1.8%; 13.3% 
B) 2.0%; 13.7% 
C) 4.4%; 11.9% 
D) 9.5%; 1.8% 
E) None of the above.

Question 18

The capital gains yield plus the dividend yield on a security is called the:

Accepted Answer

A) variance of returns. 
B) geometric return. 
C) average period return. 
D) current yield. 
E) total return. 
A) variance of returns. 
B) geometric return. 
C) average period return. 
D) current yield. 
E) total return.

Question 19

An equity has returns of 3%, 18%, -24%, and 16% for the past four years.Based on this information, what is the 95% probability range for any one given year?

Accepted Answer

A) -8.4 to 11.7% 
B) -16.1 to 22.6% 
C) -24.5 to 34.3% 
D) -35.4 to 41.9% 
E) -54.8 to 61.3% 
A) -8.4 to 11.7% 
B) -16.1 to 22.6% 
C) -24.5 to 34.3% 
D) -35.4 to 41.9% 
E) -54.8 to 61.3%

Question 20

The returns on your portfolio over the last 5 years were -5%, 20%, 0%, 10% and 5%.What is the arithmetic average return?

Accepted Answer

A) 5.0% 
B) 6.0% 
C) 7.5% 
D) 8.0% 
E) 10.0% 
A) 5.0% 
B) 6.0% 
C) 7.5% 
D) 8.0% 
E) 10.0%

Exam 9: Risk and Return: Lessons From Market History

A symmetric, bell-shaped frequency distribution that is completely deﬁned by its mean and standard deviation is the _____ distribution.

A capital gain occurs when:

What are the arithmetic and geometric average returns for a share with annual returns of 4%, 9%, -6%, and 18%?

Today, you sold 200 shares of SLG plc.Your total return on these shares is 12.5%.You purchased the shares one year ago at a price of £28.50 a share.You have received a total of £280 in dividends Over the course of the year.What is your capital gains yield on this investment?

You bought 100 shares at £20 each.At the end of the year, you received a total of £400 in dividends, and your equity was worth £2,500 total.What was total capital gain and total return?

Kids Toys plc has had total returns over the past ﬁve years of 0%, 7%, -2%, 10%, and 12%.What was the arithmetic average return on this equity?

You purchased 200 shares at a price of £36.72 each.Over the last year, you have received total dividend income of £322.What is the dividend yield?

Six months ago, you purchased 1,200 shares of ABC plc for €21.20 a share.You have received dividend payments equal to €.60 a share.Today, you sold all of your shares for €22.20 a share. What is your total monetary return on this investment?

You just sold 200 shares of Langley at a price of £38.75 a share.Last year you paid £41.50 a share to buy this equity.Over the course of the year, you received dividends totaling £1.64 per share.What Is your capital gain on this investment?

A share had returns of 8%, 39%, 11%, and -24% for the past four years.Which one of the following best describes the probability that this share will NOT lose more than 43% in any one given year?

You purchased 300 shares of Deltona for £44.90 a share.You have received a total of £630 in dividends and £14,040 in proceeds from selling the shares.What is your capital gains yield?

A portfolio of large company shares would contain which one of the following types of securities?

An equity had returns of 8%, -2%, 4%, and 16% over the past four years.What is the standard deviation of this equity for the past four years?

The standard deviation for a set of equity returns can be calculated as the:

You have a sample of returns observations for the Malta Stock Fund.The 4 returns are 7.25%, 5.6%, 12.5%, 1.0%.What is the average return and variance of these returns?

What are the arithmetic and geometric average returns for a share with annual returns of 21%, 8%, -32%, 41%, and 5%?

The capital gains yield plus the dividend yield on a security is called the:

An equity has returns of 3%, 18%, -24%, and 16% for the past four years.Based on this information, what is the 95% probability range for any one given year?

The returns on your portfolio over the last 5 years were -5%, 20%, 0%, 10% and 5%.What is the arithmetic average return?

Introduction to Corporate Finance

Corporate Governance

Financial Statement Analysis

Discounted Cash Flow Valuation

Bond, Equity and Firm Valuation

Net Present Value and Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options and Capital Budgeting

Risk and Return: the Capital Asset Pricing Model

Factor Models and the Arbitrage Pricing Theory

Risk, Cost of Capital and Capital Budgeting

Efficient Capital Markets and Behavioural Finance

Long-Term Financing: an Introduction

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Valuation and Capital Budgeting for the Levered Firm

Dividends and Other Payouts

Equity Financing

Debt Financing

Leasing

Options and Corporate Finance

Options and Corporate Finance: Extensions and Applications

Warrants and Convertibles

Financial Risk Management With Derivatives

Short-Term Finance and Planning

Short-Term Capital Management

Mergers and Acquisitions

Financial Distress

International Corporate Finance

Filters