Exam 9: Risk and Return: Lessons From Market History

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.

Over the period of 1926 through 2005 in the US,the annual rate of return on _____ has been more volatile than the annual rate of return on_____.

A equity had returns of 11%,1%,9%,15%,and -6% for the past five years.Based on these returns,what is the approximate probability that this equity will earn at least 23% in any one given year?

The average annual return on small company shares was about _____ percentage points greater than the average annual return on large-company shares over the period of 1926 to 2005 in the US.

The return pattern on your favorite share has been 5%,8%,-12%,15%,21% over the last five years.What has your average return and holding period return over the last 5 years?

The excess return required from a risky asset over that required from a risk-free asset is called the:

An equity has an expected rate of return of 8.3% and a standard deviation of 6.4%.Which one of the following best describes the probability that this equity will lose 11% or more in any one given year?

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 percentage capital gain this year?

You have a sample of returns observations for the Malta Stock Fund.The 4 returns are 7.25%,5.6%,12.5%,1.0%.What is the average return and variance of these returns?

The market portfolio of equities earned 14.7% in one year.Treasury bills earned 5.7%.What was the real risk premium on equities?

The returns on your portfolio over the last 5 years were -5%,20%,0%,10% and 5%.What is the standard deviation of your return?

A share had returns of 8%,39%,11%,and -24% for the past four years.Which one of the following best describes the probability that this share will NOT lose more than 43% in any one given year?

Over the period of 1926 to 2005 in the US,small company shares had an average return of __ %.

Winslow plc is currently selling for £40 a share.The equity has a dividend yield of 3.8%.How much dividend income will you receive per year if you purchase 500 shares?

Eight months ago,you purchased 400 shares of Winston plc at a price of £54.90 a share.The company pays quarterly dividends of £.50 a share.Today,you sold all of Your shares for £49.30 a share.What is your total percentage return on this investment?

The standard deviation for a set of equity returns can be calculated as the:

On average,for the period 1926 through 2005 in the US:

An equity has returns of 3%,18%,-24%,and 16% for the past four years.Based on this information,what is the 95% probability range for any one given year?

The total annual returns on large company US ordinary shares averaged 12.4% from 1926 to 2005 small company shares averaged 17.5%,long-term government bonds averaged 5.8%,while Treasury Bills averaged 3.8%.What was the average risk premium earned by long-term government bonds,and small company shares respectively?

Suppose you have £30,000 invested in the stock market and your banker comes to you and tries to get you to move that money into the bank's certificates of deposit (CDs).He explains that the CDs are 100% government insured and that you are taking unnecessary risks by being in the stock market.How would you respond?