You have been given this probability distribution for the holding-period return for Cheese, Inc stock: \[\begin{array} { l c l } \text { State of } & \text { Probability } & \text { HPR } \\ \text { Economy } & & \\ \text { Boom } & .20 & 24 \% \\ \text { Normal Growth } & .45 & 15 \% \\ \text { Recession } & .35 & 8 \% \end{array}\] -An investor purchased a bond 45 days ago for $985.He received $15 in interest and sold the bond for $980.What is the holding-period return on his investment?

A) 1.52% B) 0.50% C) 1.92% D) 0.01% E) None of the above A) 1.52% B) 0.50% C) 1.92% D) 0.01% E) None of the above

You have been given this probability distribution for the holding-period return for Cheese, Inc stock: \[\begin{array} { l c l } \text { State of } & \text { Probability } & \text { HPR } \\ \text { Economy } & & \\ \text { Boom } & .20 & 24 \% \\ \text { Normal Growth } & .45 & 15 \% \\ \text { Recession } & .35 & 8 \% \end{array}\] -An investor purchased a bond 63 days ago for $980.He received $17 in interest and sold the bond for $987.What is the holding-period return on his investment?

A) 1.52% B) 2.45% C) 1.92% D) 2.68% E) None of the above A) 1.52% B) 2.45% C) 1.92% D) 2.68% E) None of the above

You have been given this probability distribution for the holding-period return for Cheese, Inc stock: \[\begin{array} { l c l } \text { State of } & \text { Probability } & \text { HPR } \\ \text { Economy } & & \\ \text { Boom } & .20 & 24 \% \\ \text { Normal Growth } & .45 & 15 \% \\ \text { Recession } & .35 & 8 \% \end{array}\] -Assuming that the expected return on Cheese's stock is 14.35%,what is the standard deviation of these returns?

A) 4.72% B) 6.30% C) 4.38% D) 5.74% E) None of the above A) 4.72% B) 6.30% C) 4.38% D) 5.74% E) None of the above

You have been given this probability distribution for the holding-period return for a stock: $\begin{array}{lll} \underline{\text { State of the Economy} } &\underline{ \text { Probability} } & \underline{\text { HPR } }\\ \text { Boom } & .40 & 22\% \\ \text { Normal growth } & .35 & 11\%\\ \text { Recession } & .25 & -9 \% \end{array}$ -What is the expected variance for the stock?

A) 142.07% B) 189.96% C) 177.04% D) 128.17% E) None of the above A) 142.07% B) 189.96% C) 177.04% D) 128.17% E) None of the above

Toyota stock has the following probability distribution of expected prices one year from now: \[\begin{array} { l l l } \underline{\text { State }} &\underline{ \text { Probability} } &\underline{ \text { Price }} \\ 1 & 25 \% & \$ 50 \\ 2 & 40 \% & \$ 60 \\ 3 & 35 \% & \$ 70 \end{array}\] If you buy Toyota today for $55 and it will pay a dividend during the year of $4 per share,what is your expected holding-period return on Toyota?

A) 17.72% B) 18.89% C) 17.91% D) 18.18% E) None of the above A) 17.72% B) 18.89% C) 17.91% D) 18.18% E) None of the above

You have been given this probability distribution for the holding-period return for GM stock: $\begin{array}{lll} \underline{\text { State of the Economy} } &\underline{ \text { Probability} } & \underline{\text { HPR } }\\ \text { Boom } & .40 & 30\% \\ \text { Normal growth } & .40& 11\%\\ \text { Recession } & .20 & -10 \% \end{array}$ -What is the expected variance for GM stock?

A) 200.00% B) 221.04% C) 246.37% D) 14.87% E) 16.13% A) 200.00% B) 221.04% C) 246.37% D) 14.87% E) 16.13%

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

You have been given this probability distribution for the holding-period return for Cheese, Inc stock: State of Probability HPR Economy Boom .20 24\% Normal Growth .45 15\% Recession .35 8\% -An investor purchased a bond 45 days ago for $985.He received $15 in interest and sold the bond for $980.What is the holding-period return on his investment?

(Multiple Choice)

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Question 21

A year ago,you invested $10,000 in a savings account that pays an annual interest rate of 5%.What is your approximate annual real rate of return if the rate of inflation was 3.5% over the year?

(Multiple Choice)

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Question 22

If a portfolio had a return of 15%,the risk free asset return was 3%,and the standard deviation of the portfolio's excess returns was 34%,the risk premium would be _____.

(Multiple Choice)

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Question 23

You have been given this probability distribution for the holding-period return for Cheese, Inc stock: State of Probability HPR Economy Boom .20 24\% Normal Growth .45 15\% Recession .35 8\% -An investor purchased a bond 63 days ago for $980.He received $17 in interest and sold the bond for $987.What is the holding-period return on his investment?

(Multiple Choice)

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(33)

Question 24

You have been given this probability distribution for the holding-period return for Cheese, Inc stock: State of Probability HPR Economy Boom .20 24\% Normal Growth .45 15\% Recession .35 8\% -Assuming that the expected return on Cheese's stock is 14.35%,what is the standard deviation of these returns?

(Multiple Choice)

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Question 25

You purchase a share of CAT stock for $90.One year later,after receiving a dividend of $4,you sell the stock for $97.What was your holding-period return?

(Multiple Choice)

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Question 26

The risk premium for common stocks

(Multiple Choice)

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Question 27

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 variance for the stock?

(Multiple Choice)

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Question 28

Over the past year you earned a nominal rate of interest of 14 percent on your money.The inflation rate was 2 percent over the same period.The exact actual growth rate of your purchasing power was

(Multiple Choice)

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(30)

Question 29

You purchased a share of stock for $30.One year later you received $1.50 as a dividend and sold the share for $32.25.What was your holding-period return?

(Multiple Choice)

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Question 30

In words,the real rate of interest is approximately equal to

(Multiple Choice)

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Question 31

Toyota stock has the following probability distribution of expected prices one year from now: 1 25\% \ 50 2 40\% \ 60 3 35\% \ 70 If you buy Toyota today for $55 and it will pay a dividend during the year of $4 per share,what is your expected holding-period return on Toyota?

(Multiple Choice)

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(34)

Question 32

Discuss the historical distributions of each of the following in terms of their average return and the dispersion of their returns: U.S.small company stocks,U.S.large company stocks,and U.S.long-term government bonds.Would any of these investments cause a loss in purchasing power during a 1926-2009 holding period?

(Essay)

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Question 33

What has been the relationship between T-Bill rates and inflation rates since the 1980s?

(Multiple Choice)

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Question 34

Other things equal,an increase in the government budget deficit

(Multiple Choice)

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Question 35

The holding-period return (HPR)for a stock is equal to

(Multiple Choice)

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Question 36

An investment provides a 3% return semi-annually,its effective annual rate is

(Multiple Choice)

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Question 37

A year ago,you invested $10,000 in a savings account that pays an annual interest rate of 3%.What is your approximate annual real rate of return if the rate of inflation was 4% over the year?

(Multiple Choice)

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Question 38

When a distribution is negatively skewed,____________.

(Multiple Choice)

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Question 39

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 variance for GM stock?

(Multiple Choice)

4.7/5

(35)

Question 40

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

A year ago,you invested $10,000 in a savings account that pays an annual interest rate of 5%.What is your approximate annual real rate of return if the rate of inflation was 3.5% over the year?

If a portfolio had a return of 15%,the risk free asset return was 3%,and the standard deviation of the portfolio's excess returns was 34%,the risk premium would be _____.

You purchase a share of CAT stock for $90.One year later,after receiving a dividend of $4,you sell the stock for $97.What was your holding-period return?

The risk premium for common stocks

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 variance for the stock?

Over the past year you earned a nominal rate of interest of 14 percent on your money.The inflation rate was 2 percent over the same period.The exact actual growth rate of your purchasing power was

You purchased a share of stock for $30.One year later you received $1.50 as a dividend and sold the share for $32.25.What was your holding-period return?

In words,the real rate of interest is approximately equal to

Toyota stock has the following probability distribution of expected prices one year from now: 1 25\% \ 50 2 40\% \ 60 3 35\% \ 70 If you buy Toyota today for $55 and it will pay a dividend during the year of $4 per share,what is your expected holding-period return on Toyota?

What has been the relationship between T-Bill rates and inflation rates since the 1980s?

Other things equal,an increase in the government budget deficit

The holding-period return (HPR)for a stock is equal to

An investment provides a 3% return semi-annually,its effective annual rate is

A year ago,you invested $10,000 in a savings account that pays an annual interest rate of 3%.What is your approximate annual real rate of return if the rate of inflation was 4% over the year?

When a distribution is negatively skewed,____________.

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 variance for GM stock?

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