Question 1

Jen invested $1 fifty years ago.Today,her investment is worth $18,329.46.What is the geometric average return on this investment?

Accepted Answer

A) 30.27% 
B) 21.69% 
C) 32.46% 
D) 36.67% 
E) 25.09% 
A) 30.27% 
B) 21.69% 
C) 32.46% 
D) 36.67% 
E) 25.09% B

Question 2

EXO shares are currently selling for $22.08 each.You bought 300 shares one year ago at $18.60 a share and received dividend payments of $0.62 a share.What is the percentage capital gain for the period?

Accepted Answer

A) 14.17% 
B) 18.71% 
C) 20.24% 
D) 23.21% 
E) 22.04% 
A) 14.17% 
B) 18.71% 
C) 20.24% 
D) 23.21% 
E) 22.04% B

Question 3

Based on historical performance from 1900-2010,the U.S.equity risk premium was approximately

Accepted Answer

A) 6)1 percent. 
B) 5)4 percent. 
C) 7)2 percent. 
D) 9)0 percent. 
E) 8)3 percent. 
A) 6)1 percent. 
B) 5)4 percent. 
C) 7)2 percent. 
D) 9)0 percent. 
E) 8)3 percent. C

Question 4

During the period 2000 to 2015,which one of the following years had the lowest rate of return for the S&P 500 Index?

Accepted Answer

A) 2002 
B) 2008 
C) 2001 
D) 2009 
E) 2010 
A) 2002 
B) 2008 
C) 2001 
D) 2009 
E) 2010

Question 5

The risk premium is computed by ________ the average rate of return for an investment.

Accepted Answer

A) subtracting the inflation rate from 
B) adding the inflation rate to 
C) subtracting the average return on U.S.Treasury bills from 
D) adding the average return on U.S.Treasury bills to 
E) subtracting the average return on long-term government bonds from 
A) subtracting the inflation rate from 
B) adding the inflation rate to 
C) subtracting the average return on U.S.Treasury bills from 
D) adding the average return on U.S.Treasury bills to 
E) subtracting the average return on long-term government bonds from

Question 6

What percentage of the time should you expect to earn an annual rate of return that is within two standard deviations of the mean?

Accepted Answer

A) 100% 
B) 95% 
C) 68% 
D) 99% 
E) 75% 
A) 100% 
B) 95% 
C) 68% 
D) 99% 
E) 75%

Question 7

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

Accepted Answer

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

Question 8

During the 2008 financial crisis,the Icelandic stock exchange temporarily halted trading.What was the reaction of that market when trading resumed a few days later?

Accepted Answer

A) Increase in excess of 50 percent 
B) Increase between 25 and 50 percent 
C) Change between -25 and +25 percent 
D) Decrease between 25 and 50 percent 
E) Decrease in excess of 75 percent 
A) Increase in excess of 50 percent 
B) Increase between 25 and 50 percent 
C) Change between -25 and +25 percent 
D) Decrease between 25 and 50 percent 
E) Decrease in excess of 75 percent

Question 9

A stock has an expected rate of return of 13.9 percent and a standard deviation of 23.3 percent.Which one of the following best describes the probability that this stock will lose more than 1/3 of its value in any one year?

Accepted Answer

A) Less than 0.1% 
B) Approximately 2.25% 
C) Approximately 1.13% 
D) Less than 0.26% 
E) Approximately 4.66% 
A) Less than 0.1% 
B) Approximately 2.25% 
C) Approximately 1.13% 
D) Less than 0.26% 
E) Approximately 4.66%

Question 10

Suppose you own a risky asset with an expected return of 18.2 percent and a standard deviation of 27.2 percent.If the returns are normally distributed,the approximate probability of losing 9 percent or more in a single year is ________ percent.

Accepted Answer

A) .26 
B) 4.56 
C) 15.87 
D) 31.74 
E) 2.28 
A) .26 
B) 4.56 
C) 15.87 
D) 31.74 
E) 2.28

Question 11

Which one of these statements correctly reflects historical history for the period 1926-2015?

Accepted Answer

A) Large-company stocks have never returned more than 40 percent in a single year. 
B) There is a direct relationship between the annual returns on large-company stocks and long-term government bonds. 
C) U)S.Treasury bills have had a positive rate of return every single year. 
D) The return on U.S.Treasury bills has exceeded the rate of inflation every single year. 
E) The rate of inflation as measured by the consumer price index has been positive every single year. 
A) Large-company stocks have never returned more than 40 percent in a single year. 
B) There is a direct relationship between the annual returns on large-company stocks and long-term government bonds. 
C) U)S.Treasury bills have had a positive rate of return every single year. 
D) The return on U.S.Treasury bills has exceeded the rate of inflation every single year. 
E) The rate of inflation as measured by the consumer price index has been positive every single year.

Question 12

In 2008,the S&P 500 index had an annual decline of

Accepted Answer

A) 68 percent. 
B) 24 percent. 
C) 46 percent. 
D) 57 percent. 
E) 37 percent. 
A) 68 percent. 
B) 24 percent. 
C) 46 percent. 
D) 57 percent. 
E) 37 percent.

Question 13

A stock had annual returns of 9 percent,−16 percent,14 percent,and 2 percent over the past 4 years.What is the standard deviation of these returns?

Accepted Answer

A) 11.33% 
B) 16.09% 
C) 9)10% 
D) 13.12% 
E) 7)99% 
A) 11.33% 
B) 16.09% 
C) 9)10% 
D) 13.12% 
E) 7)99%

Question 14

Assume a 20-year period produced small-company returns of 16.7 percent with a risk premium of 9.8 percent,inflation of 5.4 percent,and long-term government bond returns of 10.1 percent.What was the risk-free rate of return during this period?

Accepted Answer

A) 4)7% 
B) 6)6% 
C) 11.3% 
D) 6)9% 
E) 4)4% 
A) 4)7% 
B) 6)6% 
C) 11.3% 
D) 6)9% 
E) 4)4%

Question 15

Kurt's Toy Co.has total annual returns for the past 5 years of -8.2 percent,11.7 percent,-6.4 percent,18.7 percent,and 6.8 percent.What is the 5-year holding period return?

Accepted Answer

A) 9)00% 
B) 17.50% 
C) 22.60% 
D) 21.67% 
E) 20.33% 
A) 9)00% 
B) 17.50% 
C) 22.60% 
D) 21.67% 
E) 20.33%

Question 16

Based on the period 1926 to 2015,which category of securities has outperformed all of the other categories?

Accepted Answer

A) Long-term corporate bonds 
B) U)S.Treasury bills 
C) Small-company stocks 
D) Large-company stocks 
E) Long-term government bonds 
A) Long-term corporate bonds 
B) U)S.Treasury bills 
C) Small-company stocks 
D) Large-company stocks 
E) Long-term government bonds

Question 17

The histogram of the returns on large-company stocks for the period 1926 to 2015 shows that the largest number of years had annual returns of

Accepted Answer

A) 0 to 10 percent. 
B) 10 to 20 percent. 
C) 20 to 30 percent. 
D) 30 to 40 percent. 
E) -10 to 0 percent. 
A) 0 to 10 percent. 
B) 10 to 20 percent. 
C) 20 to 30 percent. 
D) 30 to 40 percent. 
E) -10 to 0 percent.

Question 18

Assume that during a 7-year period,inflation averaged 2.8 percent,U.S.Treasury bill yields averaged 3.3 percent,and long-term government bond yields averaged 5.9 percent.What was the average rate of return on long-term corporate bonds if they commanded a risk premium of 0.2 percent more than the long-term government bonds?

Accepted Answer

A) 9)2% 
B) 8)9% 
C) 5)7% 
D) 6)1% 
E) 9)4% 
A) 9)2% 
B) 8)9% 
C) 5)7% 
D) 6)1% 
E) 9)4%

Question 19

The excess return you earn by moving from a relatively risk-free investment to a risky investment is called the

Accepted Answer

A) geometric average return. 
B) inflation premium. 
C) risk premium. 
D) time premium. 
E) arithmetic average return. 
A) geometric average return. 
B) inflation premium. 
C) risk premium. 
D) time premium. 
E) arithmetic average return.

Question 20

You just sold 600 shares of stock for $42.09 a share.One year ago,you purchased the stock for $44.50 a share and have received dividends totalling $0.68 per share.What is your total capital gain in dollars?

Accepted Answer

A) −$1,446 
B) −$1,038 
C) $1,038 
D) $1,446 
E) $1,854 
A) −$1,446 
B) −$1,038 
C) $1,038 
D) $1,446 
E) $1,854

Jen invested $1 fifty years ago.Today,her investment is worth $18,329.46.What is the geometric average return on this investment?

EXO shares are currently selling for $22.08 each.You bought 300 shares one year ago at $18.60 a share and received dividend payments of $0.62 a share.What is the percentage capital gain for the period?

Based on historical performance from 1900-2010,the U.S.equity risk premium was approximately

During the period 2000 to 2015,which one of the following years had the lowest rate of return for the S&P 500 Index?

The risk premium is computed by ________ the average rate of return for an investment.

What percentage of the time should you expect to earn an annual rate of return that is within two standard deviations of the mean?

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

During the 2008 financial crisis,the Icelandic stock exchange temporarily halted trading.What was the reaction of that market when trading resumed a few days later?

A stock has an expected rate of return of 13.9 percent and a standard deviation of 23.3 percent.Which one of the following best describes the probability that this stock will lose more than 1/3 of its value in any one year?

Suppose you own a risky asset with an expected return of 18.2 percent and a standard deviation of 27.2 percent.If the returns are normally distributed,the approximate probability of losing 9 percent or more in a single year is ________ percent.

Which one of these statements correctly reflects historical history for the period 1926-2015?

In 2008,the S&P 500 index had an annual decline of

A stock had annual returns of 9 percent,−16 percent,14 percent,and 2 percent over the past 4 years.What is the standard deviation of these returns?

Assume a 20-year period produced small-company returns of 16.7 percent with a risk premium of 9.8 percent,inflation of 5.4 percent,and long-term government bond returns of 10.1 percent.What was the risk-free rate of return during this period?

Kurt's Toy Co.has total annual returns for the past 5 years of -8.2 percent,11.7 percent,-6.4 percent,18.7 percent,and 6.8 percent.What is the 5-year holding period return?

Based on the period 1926 to 2015,which category of securities has outperformed all of the other categories?

The histogram of the returns on large-company stocks for the period 1926 to 2015 shows that the largest number of years had annual returns of

The excess return you earn by moving from a relatively risk-free investment to a risky investment is called the

You just sold 600 shares of stock for $42.09 a share.One year ago,you purchased the stock for $44.50 a share and have received dividends totalling $0.68 per share.What is your total capital gain in dollars?

Introduction to Corporate Finance

Financial Statements AMCQ Cash Flow

Financial Statements Analysis Amcq Financial Models

Discounted Cash Flow Valuation

Interest Rates AMCQ Bomcq Valuation

Stock Valuation

Net Present Value AMCQ Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, AMCQ Capital Budgeting

Return Amcq Risk: the Capital Asset Pricing Model Capm

Risk, cost of Capital, AMCQ Valuation

Efficient Capital Markets Amcq Behavioral Challenges

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Dividemcqs AMCQ Other Payouts

Options Amcq Corporate Finance

Short-Term Finance Amcq Planning

Raising Capital

International Corporate Finance

Mergers Amcq Acquisitions Web Only

Filters

Exam 10: Risk Amcq Return: Lessons From Market History

Jen invested $1 fifty years ago.Today,her investment is worth $18,329.46.What is the geometric average return on this investment?

EXO shares are currently selling for $22.08 each.You bought 300 shares one year ago at $18.60 a share and received dividend payments of $0.62 a share.What is the percentage capital gain for the period?

Based on historical performance from 1900-2010,the U.S.equity risk premium was approximately

During the period 2000 to 2015,which one of the following years had the lowest rate of return for the S&P 500 Index?

The risk premium is computed by ________ the average rate of return for an investment.

What percentage of the time should you expect to earn an annual rate of return that is within two standard deviations of the mean?

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

During the 2008 financial crisis,the Icelandic stock exchange temporarily halted trading.What was the reaction of that market when trading resumed a few days later?

A stock has an expected rate of return of 13.9 percent and a standard deviation of 23.3 percent.Which one of the following best describes the probability that this stock will lose more than 1/3 of its value in any one year?

Suppose you own a risky asset with an expected return of 18.2 percent and a standard deviation of 27.2 percent.If the returns are normally distributed,the approximate probability of losing 9 percent or more in a single year is ________ percent.

Which one of these statements correctly reflects historical history for the period 1926-2015?

In 2008,the S&P 500 index had an annual decline of

A stock had annual returns of 9 percent,−16 percent,14 percent,and 2 percent over the past 4 years.What is the standard deviation of these returns?

Assume a 20-year period produced small-company returns of 16.7 percent with a risk premium of 9.8 percent,inflation of 5.4 percent,and long-term government bond returns of 10.1 percent.What was the risk-free rate of return during this period?

Kurt's Toy Co.has total annual returns for the past 5 years of -8.2 percent,11.7 percent,-6.4 percent,18.7 percent,and 6.8 percent.What is the 5-year holding period return?

Based on the period 1926 to 2015,which category of securities has outperformed all of the other categories?

The histogram of the returns on large-company stocks for the period 1926 to 2015 shows that the largest number of years had annual returns of

The excess return you earn by moving from a relatively risk-free investment to a risky investment is called the

You just sold 600 shares of stock for $42.09 a share.One year ago,you purchased the stock for $44.50 a share and have received dividends totalling $0.68 per share.What is your total capital gain in dollars?

Introduction to Corporate Finance

Financial Statements AMCQ Cash Flow

Financial Statements Analysis Amcq Financial Models

Discounted Cash Flow Valuation

Interest Rates AMCQ Bomcq Valuation

Stock Valuation

Net Present Value AMCQ Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, AMCQ Capital Budgeting

Return Amcq Risk: the Capital Asset Pricing Model Capm

Risk, cost of Capital, AMCQ Valuation

Efficient Capital Markets Amcq Behavioral Challenges

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Dividemcqs AMCQ Other Payouts

Options Amcq Corporate Finance

Short-Term Finance Amcq Planning

Raising Capital

International Corporate Finance

Mergers Amcq Acquisitions Web Only

Filters