Question 1

Blackstone Mines stock returned 10.5,17.2,-9.0,and 14.5 percent over the past four years,respectively.What is the geometric average return?

Accepted Answer

A)  5.84 percent 
B)  6.36 percent 
C)  7.78 percent 
D)  9.94 percent 
E)  10.33 percent 
A)  5.84 percent 
B)  6.36 percent 
C)  7.78 percent 
D)  9.94 percent 
E)  10.33 percent

Question 2

The average compound return earned per year over a multi-year period when inflows and outflows are considered is called the:

Accepted Answer

A)  total return. 
B)  average capital gains yield. 
C)  dollar-weighted average return. 
D)  arithmetic average return. 
E)  geometric average return. 
A)  total return. 
B)  average capital gains yield. 
C)  dollar-weighted average return. 
D)  arithmetic average return. 
E)  geometric average return.

Question 3

Which one of the following statements is correct concerning the dividend yield and the total return?

Accepted Answer

A)  The dividend yield can be zero while the total return must be a positive value. 
B)  The total return can be negative but the dividend yield cannot be negative. 
C)  The total return must be greater than the dividend yield. 
D)  The total return plus the capital gains yield is equal to the dividend yield. 
E)  The dividend yield exceeds the total return when a stock increases in value. 
A)  The dividend yield can be zero while the total return must be a positive value. 
B)  The total return can be negative but the dividend yield cannot be negative. 
C)  The total return must be greater than the dividend yield. 
D)  The total return plus the capital gains yield is equal to the dividend yield. 
E)  The dividend yield exceeds the total return when a stock increases in value.

Question 4

Which one of the following had the highest risk premium for the period 1926-2016?

Accepted Answer

A)  U.S. Treasury bills 
B)  long-term government bonds 
C)  large-company stocks 
D)  small-company stocks 
E)  intermediate-term government bonds 
A)  U.S. Treasury bills 
B)  long-term government bonds 
C)  large-company stocks 
D)  small-company stocks 
E)  intermediate-term government bonds

Question 5

Which one of the following should be used to compare the overall performance of three different investments?

Accepted Answer

A)  holding period dollar return 
B)  capital gains yield 
C)  dividend yield 
D)  holding period percentage return 
E)  effective annual return 
A)  holding period dollar return 
B)  capital gains yield 
C)  dividend yield 
D)  holding period percentage return 
E)  effective annual return

Question 6

Eileen just sold a stock and realized a 6.25 percent return for a 7-month holding period.What was her annualized rate of return?

Accepted Answer

A)  9.98 percent 
B)  10.95 percent 
C)  12.78 percent 
D)  15.29 percent 
E)  17.20 percent 
A)  9.98 percent 
B)  10.95 percent 
C)  12.78 percent 
D)  15.29 percent 
E)  17.20 percent

Question 7

The dividend yield is defined as the annual dividend expressed as a percentage of the:

Accepted Answer

A)  average stock price. 
B)  initial stock price. 
C)  ending stock price. 
D)  total annual return. 
E)  capital gain. 
A)  average stock price. 
B)  initial stock price. 
C)  ending stock price. 
D)  total annual return. 
E)  capital gain.

Question 8

You purchased a stock for $25.50 a share,received a dividend of $0.70 per share,and sold the stock after one year for $28.55 a share.What was your dividend yield on this investment?

Accepted Answer

A)  2.30 percent 
B)  2.38 percent 
C)  2.45 percent 
D)  2.67 percent 
E)  2.75 percent 
A)  2.30 percent 
B)  2.38 percent 
C)  2.45 percent 
D)  2.67 percent 
E)  2.75 percent

Question 9

A stock produced annual returns of 8.3,-21,12,42,and 9 percent over the past five years,respectively.What is the geometric average return?

Accepted Answer

A)  5.78 percent 
B)  6.03 percent 
C)  6.34 percent 
D)  7.21 percent 
E)  8.20 percent 
A)  5.78 percent 
B)  6.03 percent 
C)  6.34 percent 
D)  7.21 percent 
E)  8.20 percent

Question 10

A stock had year end prices of $24,$27,$32,and $26 over the past four years,respectively.What is the geometric average return?

Accepted Answer

A)  2.02 percent 
B)  2.18 percent 
C)  2.55 percent 
D)  2.70 percent 
E)  2.81 percent 
A)  2.02 percent 
B)  2.18 percent 
C)  2.55 percent 
D)  2.70 percent 
E)  2.81 percent

Question 11

Downtown Industries common stock had returns of 5.2,10.3,9.3,and 9.5 percent,respectively,over the past four years.What is the standard deviation of these returns?

Accepted Answer

A)  2.29 percent 
B)  2.38 percent 
C)  2.41 percent 
D)  2.59 percent 
E)  2.82 percent 
A)  2.29 percent 
B)  2.38 percent 
C)  2.41 percent 
D)  2.59 percent 
E)  2.82 percent

Question 12

The geometric return on an investment is approximately equal to the arithmetic return:

Accepted Answer

A)  plus half the standard deviation. 
B)  plus half the variance. 
C)  minus half the standard deviation. 
D)  minus half the variance. 
E)  divided by two. 
A)  plus half the standard deviation. 
B)  plus half the variance. 
C)  minus half the standard deviation. 
D)  minus half the variance. 
E)  divided by two.

Question 13

Assume you own a portfolio that is invested 50 percent in large-company stocks and 50 percent in corporate bonds.If you want to increase the potential annual return on this portfolio,you could:

Accepted Answer

A)  decrease the investment in stocks and increase the investment in bonds. 
B)  replace the corporate bonds with intermediate-term government bonds. 
C)  replace the corporate bonds with Treasury bills. 
D)  increase the standard deviation of the portfolio. 
E)  reduce the expected volatility of the portfolio. 
A)  decrease the investment in stocks and increase the investment in bonds. 
B)  replace the corporate bonds with intermediate-term government bonds. 
C)  replace the corporate bonds with Treasury bills. 
D)  increase the standard deviation of the portfolio. 
E)  reduce the expected volatility of the portfolio.

Question 14

The arithmetic average return is the:

Accepted Answer

A)  summation of the returns for a number of years, t, divided by (t - 1). 
B)  compound total return for a period of years, t, divided by t. 
C)  average compound return earned per year over a multi-year period. 
D)  average squared return earned in a single year. 
E)  return earned in an average year over a multi-year period. 
A)  summation of the returns for a number of years, t, divided by (t - 1). 
B)  compound total return for a period of years, t, divided by t. 
C)  average compound return earned per year over a multi-year period. 
D)  average squared return earned in a single year. 
E)  return earned in an average year over a multi-year period.

Question 15

Over the past five years,Southwest Railway stock had annual returns of 10,14,-6,7.5,and 16 percent,respectively.What is the variance of these returns?

Accepted Answer

A)  0.00548 
B)  0.00685 
C)  0.00770 
D)  0.01370 
E)  0.02740 
A)  0.00548 
B)  0.00685 
C)  0.00770 
D)  0.01370 
E)  0.02740

Question 16

Eight months ago,you purchased 300 shares of a non-dividend paying stock for $27 a share.Today,you sold those shares for $31.59 a share.What was your annualized rate of return on this investment?

Accepted Answer

A)  17.00 percent 
B)  21.45 percent 
C)  25.50 percent 
D)  26.55 percent 
E)  28.00 percent 
A)  17.00 percent 
B)  21.45 percent 
C)  25.50 percent 
D)  26.55 percent 
E)  28.00 percent

Question 17

Tom decides to begin investing some portion of his annual bonus,beginning this year with $6,000.In the first year he earns an 8 percent return and adds $3,000 to his investment.In the second his portfolio loses 4 percent but,sticking to his plan,he adds $1,000 to his portfolio.In this year his portfolio returns 2 percent.What is Tom's dollar-weighted average return on his investments?

Accepted Answer

A)  0.34 percent 
B)  1.20 percent 
C)  1.54 percent 
D)  2.23 percent 
E)  2.58 percent 
A)  0.34 percent 
B)  1.20 percent 
C)  1.54 percent 
D)  2.23 percent 
E)  2.58 percent

Question 18

One year ago,you purchased 300 shares of stock at a cost of $6,000.The stock paid an annual dividend of $1.10 per share.Today,you sold those shares for $22.50 each.What is the capital gains yield on this investment?

Accepted Answer

A)  9.96 percent 
B)  10.52 percent 
C)  12.50 percent 
D)  13.81 percent 
E)  14.75 percent 
A)  9.96 percent 
B)  10.52 percent 
C)  12.50 percent 
D)  13.81 percent 
E)  14.75 percent

Question 19

Which one of the following had the narrowest bell curve for the period 1926-2015?

Accepted Answer

A)  large-company stocks 
B)  long-term corporate bonds 
C)  long-term government bonds 
D)  small-company stocks 
E)  U.S. Treasury bills 
A)  large-company stocks 
B)  long-term corporate bonds 
C)  long-term government bonds 
D)  small-company stocks 
E)  U.S. Treasury bills

Question 20

The average compound return earned per year over a multi-year period is called the:

Accepted Answer

A)  total return 
B)  average capital gains yield 
C)  variance 
D)  arithmetic average return 
E)  geometric average return 
A)  total return 
B)  average capital gains yield 
C)  variance 
D)  arithmetic average return 
E)  geometric average return

Blackstone Mines stock returned 10.5,17.2,-9.0,and 14.5 percent over the past four years,respectively.What is the geometric average return?

The average compound return earned per year over a multi-year period when inflows and outflows are considered is called the:

Which one of the following statements is correct concerning the dividend yield and the total return?

Which one of the following had the highest risk premium for the period 1926-2016?

Which one of the following should be used to compare the overall performance of three different investments?

Eileen just sold a stock and realized a 6.25 percent return for a 7-month holding period.What was her annualized rate of return?

The dividend yield is defined as the annual dividend expressed as a percentage of the:

You purchased a stock for $25.50 a share,received a dividend of $0.70 per share,and sold the stock after one year for $28.55 a share.What was your dividend yield on this investment?

A stock produced annual returns of 8.3,-21,12,42,and 9 percent over the past five years,respectively.What is the geometric average return?

A stock had year end prices of $24,$27,$32,and $26 over the past four years,respectively.What is the geometric average return?

Downtown Industries common stock had returns of 5.2,10.3,9.3,and 9.5 percent,respectively,over the past four years.What is the standard deviation of these returns?

The geometric return on an investment is approximately equal to the arithmetic return:

Assume you own a portfolio that is invested 50 percent in large-company stocks and 50 percent in corporate bonds.If you want to increase the potential annual return on this portfolio,you could:

The arithmetic average return is the:

Over the past five years,Southwest Railway stock had annual returns of 10,14,-6,7.5,and 16 percent,respectively.What is the variance of these returns?

Eight months ago,you purchased 300 shares of a non-dividend paying stock for $27 a share.Today,you sold those shares for $31.59 a share.What was your annualized rate of return on this investment?

One year ago,you purchased 300 shares of stock at a cost of $6,000.The stock paid an annual dividend of $1.10 per share.Today,you sold those shares for $22.50 each.What is the capital gains yield on this investment?

Which one of the following had the narrowest bell curve for the period 1926-2015?

The average compound return earned per year over a multi-year period is called the:

The Investment Process

Overview of Security Types

Mutual Funds and Other Investment Companies

The Stock Market

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return,Risk,and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Projecting Cash Flow and Earnings

Corporate and Government Bonds

Global Economic Activity and Industry Analysis

Mortgage-Backed Securities

Filters

Exam 1: A Brief History of Risk and Return

Blackstone Mines stock returned 10.5,17.2,-9.0,and 14.5 percent over the past four years,respectively.What is the geometric average return?

The average compound return earned per year over a multi-year period when inflows and outflows are considered is called the:

Which one of the following statements is correct concerning the dividend yield and the total return?

Which one of the following had the highest risk premium for the period 1926-2016?

Which one of the following should be used to compare the overall performance of three different investments?

Eileen just sold a stock and realized a 6.25 percent return for a 7-month holding period.What was her annualized rate of return?

The dividend yield is defined as the annual dividend expressed as a percentage of the:

You purchased a stock for $25.50 a share,received a dividend of $0.70 per share,and sold the stock after one year for $28.55 a share.What was your dividend yield on this investment?

A stock produced annual returns of 8.3,-21,12,42,and 9 percent over the past five years,respectively.What is the geometric average return?

A stock had year end prices of $24,$27,$32,and $26 over the past four years,respectively.What is the geometric average return?

Downtown Industries common stock had returns of 5.2,10.3,9.3,and 9.5 percent,respectively,over the past four years.What is the standard deviation of these returns?

The geometric return on an investment is approximately equal to the arithmetic return:

Assume you own a portfolio that is invested 50 percent in large-company stocks and 50 percent in corporate bonds.If you want to increase the potential annual return on this portfolio,you could:

The arithmetic average return is the:

Over the past five years,Southwest Railway stock had annual returns of 10,14,-6,7.5,and 16 percent,respectively.What is the variance of these returns?

Eight months ago,you purchased 300 shares of a non-dividend paying stock for $27 a share.Today,you sold those shares for $31.59 a share.What was your annualized rate of return on this investment?

One year ago,you purchased 300 shares of stock at a cost of $6,000.The stock paid an annual dividend of $1.10 per share.Today,you sold those shares for $22.50 each.What is the capital gains yield on this investment?

Which one of the following had the narrowest bell curve for the period 1926-2015?

The average compound return earned per year over a multi-year period is called the:

The Investment Process

Overview of Security Types

Mutual Funds and Other Investment Companies

The Stock Market

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return,Risk,and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Projecting Cash Flow and Earnings

Corporate and Government Bonds

Global Economic Activity and Industry Analysis

Mortgage-Backed Securities

Filters