Exam 6: The Risks and Returns From Investing

Present value is based on the concept of:

The returns and risk measures on this chapter are calculated from historical data.Are such measures good predictors of the future? What are some circumstances that could change to change future return and risk? How can an investor use these return and risk measures to help construct a portfolio?

Which of the following statements concerning the equity risk premium is true?

John Crossborder buys 1 share of Telmex at 140 pesos when the value of the peso is stated in dollars at $0.35.One year later,Telmex is selling for 155 pesos and paid a dividend of 5 pesos during the year.If after 1 year the value of the pesos is $0.29,what will John's rate of return be in U.S.dollars?

What is the best measure of risk for returns of a sole proprietorship?

If you deposit $1,000 today at 12 percent,how much will you have in 10 years?

Financial risk is most associated with:

If interest rates rose,you would expect ------------ to also rise.

The less the variability of return,the greater the risk.

Both present value and future value are based upon the concept of the time value of money.

If the Dow Jones Industrials had a price appreciation of 6 percent one year and yet total return for the year was 9 percent,the difference would be due to:

A Chinese stock denominated in Chinese yuan will have an increase in its dollar-denominated return if the Chinese yuan strengthens against the dollar.

New regulations concerning auto emissions would be a type of market risk for the auto industry.

If interest rates are expected to rise,you would expect:

A stock is purchased for $50 on January 1 and sold on December 31 for $72.A $5.00 per share dividend is paid during the year. (a)Calculate the TR. (b)Calculate the RR.