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

A stock is held one year,during which time its dividend yield was greater than its capital gains yield.For this stock,the percentage return:

When the annual rate of return on U.S.Treasury bills is historically high,investors expect the risk premium on the stock market to be:

Calculate the expected return,variance,and standard deviations for investments in either stock A or stock B,or an equally weighted portfolio of both. B.

What is the standard deviation of return of a four-stock portfolio (each stock being equally weighted)that produced returns of 20%,20%,25%,and 30%?

The historical record fails to show that investors have received a risk premium for holding risky assets.

Which of the following guarantees is offered to common stock investors?

How is the standard deviation of returns for individual common stocks or for a stock portfolio calculated?

An investor receives a 15% total return by purchasing a stock for $40 and selling it after one year with a 5% capital gain.How much was received in dividend income during the year?

The standard deviations of individual stocks are generally higher than the standard deviation of the market portfolio because individual stocks:

What nominal return was received by an investor when inflation averaged 8.0% and the real rate of return was a negative 2.5%?

The fact that historical returns on Treasury bills are less volatile than common stock returns indicates that:

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% in nominal terms and 4% in real terms? The portfolio value is now approximately:

Macro risks are faced by all common stock investors.

How much is an investor's tolerance for risk worth over a long horizon? Calculate the difference in accumulation in real terms for an investor who initially invests $25,000 and ignores it for 20 years in either a long-term Treasury bond portfolio or a portfolio of diversified common stocks.Assume the historic real returns of 2.1% annually for bonds and 9.3% for common stocks.

Which of the following risk types can be diversified by adding stocks to a portfolio?