Consider the following correlations: \[\begin{array} { | l | c | c | c | } \hline & \text { IBM } & \text { Apple } & \text { Disney } \\ \hline \text { IBM } & 1.0 & & \\ \hline \text { Apple } & - .2 & 1 & \\ \hline \text { Disney } & .3 & - .7 & 1 \\ \hline \end{array}\] Given this data, which of the following is most preferable if an investor can only select one pair of companies?

A) Apple and IBM B) Disney and IBM C) Disney and Apple D) It does not matter which two are selected-there is no preference order. A) Apple and IBM B) Disney and IBM C) Disney and Apple D) It does not matter which two are selected-there is no preference order.

The following table shows your stock positions at the beginning of the year, the dividends that each stock paid during the year, and the stock prices at the end of the year. What is your portfolio percentage return? \[\begin{array} { l c c c c } \hline \text { Company } & \text { Shares } & \begin{array} { c } \text { Beginning } \\ \text { of Year } \\ \text { Price } \end{array} & \begin{array} { c } \text { Dividend } \\ \text { per share } \end{array} & \begin{array} { c } \text { End of } \\ \text { Year } \\ \text { Price } \end{array} \\ \hline \mathrm { W } & 200 & \$ 45.00 & \$ 2.50 & \$ 44.00 \\ \mathrm { P } & 200 & \$ 5.00 & \$ 1.00 & \$ 5.25 \\ \mathrm {~J} & 400 & \$ 20.00 & & \$ 22.00 \\ \mathrm { D } & 200 & \$ 27.00 & \$ 1.25 & \$ 27.50 \\ \hline \end{array}\]

A) 3.21 percent B) 4.06 percent C) 7.26 percent D) 8.97 percent A) 3.21 percent B) 4.06 percent C) 7.26 percent D) 8.97 percent

Consider the following annual returns of Estee Lauder and Lowe's Companies: \[\begin{array} { l l l } \hline & \begin{array} { l } \text { Estee } \\ \text { Lauder } \end{array} & \begin{array} { l } \text { Lowe's } \\ \text { Companies } \end{array} \\ \hline 2006 & 20.4 \% & - 6.0 \% \\ 2005 & - 26.0 \% & 16.1 \% \\ 2004 & 17.6 \% & 14.2 \% \\ 2003 & 49.9 \% & 48.0 \% \\ 2002 & - 16.8 \% & - 19.0 \% \\ \hline \end{array}\] Compute each stock's average return, standard deviation, and coefficient of variation.

A) Estee Lauder: 9.02 percent; 17.99 percent; 2.00 and Lowe's Companies: 10.66 percent; 18.99 percent; 1.78 B) Estee Lauder: 9.02 percent; 30.69 percent; 3.4 and Lowe's Companies: 10.66 percent; 18.99 percent; 1.78 C) Estee Lauder: 9.02 percent; 30.69 percent; 3.4 and Lowe's Companies: 10.66 percent; 25.46 percent; 2.39 D) Estee Lauder: 10.7 percent; 17.79 percent; 1.66 and Lowe's Companies: 12.64 percent; 18.99 percent; 1.50 A) Estee Lauder: 9.02 percent; 17.99 percent; 2.00 and Lowe's Companies: 10.66 percent; 18.99 percent; 1.78 B) Estee Lauder: 9.02 percent; 30.69 percent; 3.4 and Lowe's Companies: 10.66 percent; 18.99 percent; 1.78 C) Estee Lauder: 9.02 percent; 30.69 percent; 3.4 and Lowe's Companies: 10.66 percent; 25.46 percent; 2.39 D) Estee Lauder: 10.7 percent; 17.79 percent; 1.66 and Lowe's Companies: 12.64 percent; 18.99 percent; 1.50

The following table shows your stock positions at the beginning of the year, the dividends that each stock paid during the year, and the stock prices at the end of the year. What is your portfolio percentage return? \[\begin{array} { l c c c c } \hline \text { Company } & \text { Shares } & \begin{array} { c } \text { Beginning } \\ \text { of Year } \\ \text { Price } \end{array} & \begin{array} { c } \text { Dividend } \\ \text { per share } \end{array} & \begin{array} { c } \text { End of } \\ \text { Year } \\ \text { Price } \end{array} \\ \hline \mathrm { W } & 500 & \$ 5.00 & \$ 0.50 & \$ 4.00 \\ \mathrm { P } & 100 & \$ 15.00 & \$ 1.00 & \$ 15.25 \\ \mathrm {~J} & 200 & \$ 25.00 & & \$ 22.00 \\ \mathrm { D } & 200 & \$ 30.00 & \$ 2.00 & \$ 33.50 \\ \hline \end{array}\]

A) 2.50 percent B) 5.83 percent C) 10.50 percent D) 13.83 percent A) 2.50 percent B) 5.83 percent C) 10.50 percent D) 13.83 percent

Exam 9: Characterizing Risk and Return

You have $10,000 to invest. You want to purchase shares of Alaska Air at $50.00, Best Buy at $50.00, and Ford Motor at $10.00. How many shares of each company should you purchase so that your portfolio consists of 25 percent Alaska Air, 40 percent Best Buy, and 35 percent Ford Motor? Report only whole stock shares.

(Multiple Choice)

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Question 61

Year-to-date, Company O had earned a -2.10 percent return. During the same time period, Company V earned 8.00 percent and Company M earned 6.25 percent. If you have a portfolio made up of 40 percent Company O, 30 percent Company V, and 30 percent Company M, what is your portfolio return?

(Multiple Choice)

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Question 62

Sally wants to invest in only two stocks. Which pair of stocks should Sally select?

(Multiple Choice)

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Question 63

Which of the following statements is correct with regards to diversification?

(Multiple Choice)

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Question 64

Which statement is true?

(Multiple Choice)

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Question 65

The past five monthly returns for PG Company are 3.25 percent, -1.45 percent, 4.35 percent, 6.49 percent, and 3.75 percent. What is the average monthly return?

(Multiple Choice)

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Question 66

Consider the following correlations: IBM Apple Disney IBM 1.0 Apple -.2 1 Disney .3 -.7 1 Given this data, which of the following is most preferable if an investor can only select one pair of companies?

(Multiple Choice)

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Question 67

Which of the following is the concept and procedure for combining securities into a portfolio to minimize risk?

(Multiple Choice)

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Question 68

Rank the following three stocks by their risk-return relationship, best to worst. Rail Haul has an average return of 10 percent and standard deviation of 19 percent. The average return and standard deviation of Idol Staff are 12 percent and 22 percent; and of Poker-R-Us are 11 percent and 25 percent.

(Multiple Choice)

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Question 69

The efficient frontier portfolios are:

(Multiple Choice)

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Question 70

Which of these statements is true?

(Multiple Choice)

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Question 71

Which of the following is defined as the portion of total risk that is attributable to firm or industry factors and can be reduced through diversification?

(Multiple Choice)

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Question 72

You have $15,040 to invest. You want to purchase shares of Company Air at $42.50, Company B at $51.50, and Company F at $9.75. How many shares of each company should you purchase so that your portfolio consists of 20 percent Company A, 40 percent Company B, and 40 percent Company F? Report only whole stock shares.

(Multiple Choice)

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Question 73

Which of the following describes what will occur as you randomly add stocks to your portfolio?

(Multiple Choice)

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Question 74

Which of these includes any capital gain (or loss) that occurred as well as any income that you received from a specific investment?

(Multiple Choice)

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Question 75

Which of the following is correct regarding the coefficient of variation?

(Multiple Choice)

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Question 76

The following table shows your stock positions at the beginning of the year, the dividends that each stock paid during the year, and the stock prices at the end of the year. What is your portfolio percentage return? Company Shares Beginning of Year Price Dividend per share End of Year Price 200 \ 45.00 \ 2.50 \ 44.00 200 \ 5.00 \ 1.00 \ 5.25 400 \ 20.00 \ 22.00 200 \ 27.00 \ 1.25 \ 27.50

(Multiple Choice)

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Question 77

Consider the following annual returns of Estee Lauder and Lowe's Companies: Estee Lauder Lowe's Companies 2006 20.4\% -6.0\% 2005 -26.0\% 16.1\% 2004 17.6\% 14.2\% 2003 49.9\% 48.0\% 2002 -16.8\% -19.0\% Compute each stock's average return, standard deviation, and coefficient of variation.

(Multiple Choice)

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Question 78

The following table shows your stock positions at the beginning of the year, the dividends that each stock paid during the year, and the stock prices at the end of the year. What is your portfolio percentage return? Company Shares Beginning of Year Price Dividend per share End of Year Price 500 \ 5.00 \ 0.50 \ 4.00 100 \ 15.00 \ 1.00 \ 15.25 200 \ 25.00 \ 22.00 200 \ 30.00 \ 2.00 \ 33.50

(Multiple Choice)

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Question 79

Determine which one of these three portfolios dominates another. Name the dominated portfolio and the portfolio that dominates it. Portfolio Blue has an expected return of 13 percent and risk of 17 percent. The expected return and risk of portfolio Yellow are 15 percent and 19 percent, and for the Purple portfolio are 12 percent and 18 percent.

(Multiple Choice)

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Question 80

Year-to-date, Company O had earned a -2.10 percent return. During the same time period, Company V earned 8.00 percent and Company M earned 6.25 percent. If you have a portfolio made up of 40 percent Company O, 30 percent Company V, and 30 percent Company M, what is your portfolio return?

Sally wants to invest in only two stocks. Which pair of stocks should Sally select?

Which of the following statements is correct with regards to diversification?

Which statement is true?

The past five monthly returns for PG Company are 3.25 percent, -1.45 percent, 4.35 percent, 6.49 percent, and 3.75 percent. What is the average monthly return?

Consider the following correlations: IBM Apple Disney IBM 1.0 Apple -.2 1 Disney .3 -.7 1 Given this data, which of the following is most preferable if an investor can only select one pair of companies?

Which of the following is the concept and procedure for combining securities into a portfolio to minimize risk?

The efficient frontier portfolios are:

Which of these statements is true?

Which of the following is defined as the portion of total risk that is attributable to firm or industry factors and can be reduced through diversification?

Which of the following describes what will occur as you randomly add stocks to your portfolio?

Which of these includes any capital gain (or loss) that occurred as well as any income that you received from a specific investment?

Which of the following is correct regarding the coefficient of variation?

Consider the following annual returns of Estee Lauder and Lowe's Companies: Estee Lauder Lowe's Companies 2006 20.4\% -6.0\% 2005 -26.0\% 16.1\% 2004 17.6\% 14.2\% 2003 49.9\% 48.0\% 2002 -16.8\% -19.0\% Compute each stock's average return, standard deviation, and coefficient of variation.

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Filters