Exam 11: Introduction to Risk, Return, and the Opportunity Cost of Capital

The idea that investors in common stock may expect a lower total return when prices are relatively stable suggests that:

The variance of a stock's returns can be calculated as the:

Which of the following security portfolios should offer the highest maturity premium?

If a stock is purchased for $25 per share and held one year,during which time a $3.50 dividend is paid and the price climbs to $28.25,the nominal rate of return is:

Common stocks have offered an annual risk premium in nominal terms,but they have:

The covariance of two stocks was calculated at -.01733.If the standard deviation of the first stock is .106 and .164 for the second,determine the correlation.

What is the approximate standard deviation of returns for a one-year project that is equally likely to return 100 percent as it is to provide a 100 percent loss?

The risk that remains in a stock portfolio after efforts to diversify is known as unique risk.

Real rates of return will be positive as long as:

Which of the following statements is correct for an investor starting with $1,000 in common stocks over a 20-year investment horizon in which stocks averaged 11 percent in nominal terms and 4 percent in real terms? The portfolio value is now approximately:

Systematic risk is faced by all common stock investors.

If when a coin is tossed the observance of a head rewards you with a dollar and the observance of a tail costs you fifty cents,how much would you expect to gain after twenty tosses?

When high growth is expected in the economy,an investor should receive higher returns from:

Which of the following would you expect to represent the broadest-based index of Canadian stocks?

Common stock is held for two years,during which time it receives an annual dividend of $10.The stock was sold for $100 and generated an average annual return of 16 percent.What price was paid for the stock?

The major benefit of diversification is to:

Averaging the deviations from the mean for a portfolio of securities will:

Stock A has 10 million shares issued and Stock B has 5 million shares issued.What is their relative weighting if both stocks are represented in the S&P 500?

The variance of an investment's returns is a measure of the:

If a project's expected return is 15 percent,which represents a 35 percent return in a booming economy and a 5 percent return in a stagnant economy,what is the probability of a booming economy?