Exam 10: Risk and Return: Lessons From Market History

The market portfolio of common stocks earned 20.4% last year. Treasury bills earned 5.3% on average last year. The average inflation rate was 2.5%. What was the real return on T-Bills?

The expected return on a security in the market context is:

If the expected return on the market is 16%, then using the historical risk premium of 8.5%, the current risk-free rate is:

On January 1, 2013 Westman Fuji sold for $40 and on January 1, 2014 Westman Fuji sold for $39.50. During 2013 Westman Fuji paid four quarterly dividends of $1.50. Fuji's dividend yield is:

Suppose you own a risky asset with an expected return of 12% and a standard deviation of 20%. If the returns are normally distributed, the approximate probability of receiving a return greater than 32% is:

Excelsior shares are currently selling for $25.00 each. You bought 200 shares one year ago at $24 and received dividend payments of $1.50 per share. What was your percentage capital gain this year?

Capital gains are defined as:

Capital market history shows us that a correct ordering of the average arithmetic mean return for asset classes, from lowest to highest, is:

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

The Alpha stock you bought for $26.75 a year ago is now selling for $32.50. Alpha also paid you $2.25 in dividends. What would your dollar return be from this stock?

You have a sample of returns observations for the Malta Stock Fund. The 4 returns are 0.0725, 0.056, 0.125, 0.010. What is the average return and variance of these returns?

The normal distribution is a theoretical distribution for a population. The distribution can be used to estimate how risky a cash flow or return is. If the mean is 12% and the standard deviation is 22.6%, what is the range of possible returns for a 2 standard deviation change and what percentage of all observations would fall within 2 standard deviations?

Little John Industries sold for $1.90 on January 1 and ended the year at a price of $2.50. In addition, the stock paid dividends of $0.20 per share. Calculate Little John's dividend yield, capital gain yield, and total rate of return for the year.

Capital market history shows us that the average return relationship between securities where:

The return pattern on your favorite stock has been 5%, 8%, -12%, 15%, 21% over the last five years. What is your average return and total change in wealth per year over the period?

If the average return on common stocks was 13.3%, the average Treasury bill rate was 3.8%, and the average inflation rate was 3.2% what would be the expected nominal and approximate real market return for common stocks if the Treasury bill rate is expected to be 5.5% and the inflation rate is 4.1%?

The market portfolio of common stocks earned 14.7% last year. Treasury bills earned 5.7% on average last year. The average inflation rate was 4.0%. What was the real risk premium on equities?

You earned a total return of -5% on NoDotCom this year, earned -40% last year, and earned 30% two years ago. Calculate both the three-year holding period return and the average three year return.

A year ago, you purchased 300 shares of IXC Technologies, Inc. stock at a price of $9.03 per share. The stock pays an annual dividend of $.10 per share. Today, you sold all of your shares for $28.14 per share. What is your total dollar return on this investment?

Kids Toy Co. has had total returns over the past five years of 0%, 7%, -2%, 10%, and 12%. What was the mean return on this stock and its variability in percent return?