Exam 4: The Trade-Off Between Risk and Return

Bavarian Sausage You bought a share of Bavarian Sausage stock for $46.50 at the beginning of the year. During the year the stock paid a $2.75 dividend and at the end of the year it trades at $52.75. -Refer to Bavarian Sausage. What is the capital gain/loss on your stock investment?

Bavarian Sausage stock has an average historical return of 16.3% and a standard deviation of 5.3%. In which range do you expect the returns of Bavarian Sausage 68% of the time.

Bavarian Sausage You bought a share of Bavarian Sausage stock for $46.50 at the beginning of the year. During the year the stock paid a $2.75 dividend and at the end of the year it trades at $52.75. -Refer to Bavarian Sausage. What is the total dollar return on your investment?

Bavarian Sausage stock has an average historical return of 16.3% and a standard deviation of 5.3%. In which range do you expect the returns of Bavarian Sausage 95% of the time.

Bavarian Sausage You bought a share of Bavarian Sausage stock for $46.50 at the beginning of the year. During the year the stock paid a $2.75 dividend and at the end of the year it trades at $52.75. -What is the average return of stock C?

Bavarian Sausage You bought a share of Bavarian Sausage stock for $46.50 at the beginning of the year. During the year the stock paid a $2.75 dividend and at the end of the year it trades at $52.75. -Refer to Bavarian Sausage. What is the total return of your stock investment?

Which statements are TRUE regarding risk and return? Statement I: Diversification is the process of removing systematic risk from a portfolio. Statement II: In general, the greater the risk, the greater the return required by an investor. Statement III: Investors should focus on real returns if they are concerned about the purchasing power of their wealth.

Bavarian Sausage You bought a share of Bavarian Sausage stock for $46.50 at the beginning of the year. During the year the stock paid a $2.75 dividend and at the end of the year it trades at $52.75. -What is the average return for stock A?

Big Diesel Incorporated Consider the following historical returns for Big Diesel Incorporated: -Refer to Big Diesel Incorporated. What is the average return over the five year time period?

Bavarian Sausage You bought a share of Bavarian Sausage stock for $46.50 at the beginning of the year. During the year the stock paid a $2.75 dividend and at the end of the year it trades at $52.75. -What is the average return of stock B?