Exam 10: Risk and Return Lessons From Market History

Suppose you own a risky asset with an expected return of 12% and a standard deviation of 20%.If the returns are normally distributed,the approximate probability of receiving a return greater than 32% is approximately:

One year ago,you purchased a stock at a price of $32 a share.Today,you sold the stock and realized a total return of 25%.Your capital gain was $6 a share.What was your dividend yield on this stock?

Excelsior shares are currently selling for $25 each.You bought 200 shares one year ago at $24 and received dividend payments of $1.50 per share.What was your total rate of return?

The market portfolio of common stocks earned 14.2% in one year.Treasury bills earned 5.5%.What was the real risk premium on equities?

The Zolo Company just declared that it is increasing its annual dividend from $1.00 per share to $1.25 per share.If the stock price remains constant,then:

One year ago,you purchased a stock at a price of $32.50.The stock pays quarterly dividends of $.40 per share.Today,the stock is worth $34.60 per share.What is the total amount of your dividend income to date from this investment?

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

Which one of the following is a correct statement concerning risk premium?

You earned a total return of -5% on NoDotCom this year,earned -40% last year,and earned 30% two years ago.Calculate both the three-year holding period return and the average three year return.

You have a sample of returns observations for the Malta Stock Fund.The 4 returns are 0.06,0.05,0.12,0.01.What is the average return and variance of these returns?

Kids Toy Co.has had total returns over the past five years of -4%,7%,-2%,19%,and 12%.What was the arithmetic average return on this stock?

Capital market history shows us that the average return relationship from lowest to highest between securities is:

Winslow,Inc.stock is currently selling for $40 a share.The stock has a dividend yield of 2.8%.How much dividend income will you receive per year if you purchase 600 shares of this stock?

What are the lessons learned from capital market history? What evidence is there to suggest these lessons are correct?

The risk premium is computed by ______ the average return for the investment.

Over the period of 1926 to 2009,the average rate of inflation was _______%.

The returns for IMB over the last 3 years are given below.Assuming no dividends were paid,what was the 3-year holding period return? Given the following information: Year 1 return = 10%,Year 2 return = 15%,Year 3 return = 12%.

A stock had returns of 8%,-2%,4%,and 16% over the past four years.What is the standard deviation of this stock for the past four years?

The average annual return on small company stocks was about _______% points greater than the average annual return on large-company stocks over the period of 1926 to 2009.

You purchased 250 shares of Deltona,Inc.stock for $44.40 a share.You have received a total of $630 in dividends and $12,040 in proceeds from selling the shares.What is your capital gains yield on this stock?