Exam 5: Introduction to Risk,return,and the Historical Record

Over the past year you earned a nominal rate of interest of 8 percent on your money.The inflation rate was 4 percent over the same period.The exact actual growth rate of your purchasing power was

A year ago,you invested $12,000 in an investment that produced a return of 16%.What is your approximate annual real rate of return if the rate of inflation was 2% over the year?

If the nominal return is constant,the after-tax real rate of return

Over the past year you earned a nominal rate of interest of 8 percent on your money.The inflation rate was 3.5 percent over the same period.The exact actual growth rate of your purchasing power was

If a portfolio had a return of 15%,the risk free asset return was 5%,and the standard deviation of the portfolio's excess returns was 30%,the Sharpe measure would be _____.

If the interest rate paid by borrowers and the interest rate received by savers accurately reflect the realized rate of inflation:

You have been given this probability distribution for the holding-period return for a stock: Boom .40 22\% Normal growth .35 11\% Recession .25 -9\% -What is the expected standard deviation for the stock?

If a portfolio had a return of 12%,the risk free asset return was 4%,and the standard deviation of the portfolio's excess returns was 25%,the risk premium would be _____.

________ is a risk measure that indicates vulnerability to extreme negative returns.

Discuss why common stocks must earn a risk premium.

An investment provides a 2% return semi-annually,its effective annual rate is

The most common measure of loss associated with extremely negative returns is ________.

Discuss the relationships between interest rates (both real and nominal),expected inflation rates,and tax rates on investment returns.

If the annual real rate of interest is 3.5% and the expected inflation rate is 2.5%,the nominal rate of interest would be approximately

Which of the following determine(s)the level of real interest rates? I.The supply of savings by households and business firms II.The demand for investment funds III.The government's net supply and/or demand for funds

The holding-period return (HPR)on a share of stock is equal to

If the annual real rate of interest is 5% and the expected inflation rate is 4%,the nominal rate of interest would be approximately

If a portfolio had a return of 10%,the risk free asset return was 4%,and the standard deviation of the portfolio's excess returns was 25%,the risk premium would be _____.

You have been given this probability distribution for the holding-period return for GM stock: Boom .40 30\% Normal growth .40 11\% Recession .20 -10\% -What is the expected standard deviation for GM stock?

You have been given this probability distribution for the holding-period return for KMP stock: Boom .30 18\% Normal growth .50 12\% Recession .20 -5\% -What is the expected holding-period return for KMP stock?