Question 1

Which of the following statements is correct?

Accepted Answer

A)  A single stock has a lot of diversifiable risk. 
B)  A single stock has more market risk than a diversified portfolio of stocks. 
C)  Bonds and stocks have a high correlation because they are both financial assets. 
D)  None of the statements are correct. 
A)  A single stock has a lot of diversifiable risk. 
B)  A single stock has more market risk than a diversified portfolio of stocks. 
C)  Bonds and stocks have a high correlation because they are both financial assets. 
D)  None of the statements are correct.

Question 2

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?

Accepted Answer

A)  3.85 percent 
B)  11.54 percent 
C)  15.38 percent 
D)  17.58 percent 
A)  3.85 percent 
B)  11.54 percent 
C)  15.38 percent 
D)  17.58 percent

Question 3

To find the percentage return of an investment:

Accepted Answer

A)  multiply the dollar return by the investment's value at the beginning of the period. 
B)  divide the dollar return by the investment's value at the beginning of the period. 
C)  multiply the dollar return by the investment's value at the end of the period. 
D)  divide the dollar return by the investment's value at the end of the period. 
A)  multiply the dollar return by the investment's value at the beginning of the period. 
B)  divide the dollar return by the investment's value at the beginning of the period. 
C)  multiply the dollar return by the investment's value at the end of the period. 
D)  divide the dollar return by the investment's value at the end of the period.

Question 4

FedEx Corp.stock ended the previous year at $113.39 per share.It paid a $0.40 per share dividend last year.It ended last year at $126.69.If you owned 300 shares of FedEx,what was your dollar return and percent return?

Accepted Answer

A)  $3,990; 11.73 percent 
B)  $4,110; 12.08 percent 
C)  $4,250; 12.29 percent 
D)  $2,009; 9.13 percent 
A)  $3,990; 11.73 percent 
B)  $4,110; 12.08 percent 
C)  $4,250; 12.29 percent 
D)  $2,009; 9.13 percent

Question 5

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.

Accepted Answer

A)  Portfolio Blue dominates portfolio Yellow 
B)  Portfolio Blue dominates portfolio Purple 
C)  Portfolio Purple dominates portfolio Blue 
D)  Portfolio Purple dominates portfolio Yellow 
A)  Portfolio Blue dominates portfolio Yellow 
B)  Portfolio Blue dominates portfolio Purple 
C)  Portfolio Purple dominates portfolio Blue 
D)  Portfolio Purple dominates portfolio Yellow

Question 6

Consider the risk-return relationship in T-bills during each decade since 1950.Given this data,which of the following statements is correct?

Accepted Answer

A)  The best risk-return relationship was during the 1950s. 
B)  The best risk-return relationship was during the 1990s. 
C)  Since T-bills are backed by the full faith of the U.S. government, computing the risk-return relationship for them is invalid. 
D)  None of the statements are correct. 
A)  The best risk-return relationship was during the 1950s. 
B)  The best risk-return relationship was during the 1990s. 
C)  Since T-bills are backed by the full faith of the U.S. government, computing the risk-return relationship for them is invalid. 
D)  None of the statements are correct.

Question 7

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 7 percent and risk of 10 percent.The expected return and risk of portfolio Yellow are 13 percent and 10 percent,and for the Purple portfolio are 9 percent and 14 percent.

Accepted Answer

A)  Portfolio Blue dominates portfolio Yellow 
B)  Portfolio Yellow dominates portfolio Blue 
C)  Portfolio Purple dominates portfolio Blue 
D)  Portfolio Purple dominates portfolio Yellow 
A)  Portfolio Blue dominates portfolio Yellow 
B)  Portfolio Yellow dominates portfolio Blue 
C)  Portfolio Purple dominates portfolio Blue 
D)  Portfolio Purple dominates portfolio Yellow

Question 8

Year to date,Company Y had earned a 7 percent return.During the same time period,Company R earned 9.25 percent and Company C earned −2.25 percent.If you have a portfolio made up of 35 percent Y,40 percent R,and 25 percent C,what is your portfolio return?

Accepted Answer

A)  4.6667 percent 
B)  6.1667 percent 
C)  5.5875 percent 
D)  12.6625 percent 
A)  4.6667 percent 
B)  6.1667 percent 
C)  5.5875 percent 
D)  12.6625 percent

Question 9

Which of these statements is true?

Accepted Answer

A)  When people purchase a stock, they know exactly what their dollar and percent return are going to be. 
B)  Many people purchase stocks as they find comfort in the certainty for this safe form of investing. 
C)  When people purchase a stock, they know the short-term return, but not the long-term return. 
D)  When people purchase a stock, they do not know what their return is going to be-either short term or in the long run. 
A)  When people purchase a stock, they know exactly what their dollar and percent return are going to be. 
B)  Many people purchase stocks as they find comfort in the certainty for this safe form of investing. 
C)  When people purchase a stock, they know the short-term return, but not the long-term return. 
D)  When people purchase a stock, they do not know what their return is going to be-either short term or in the long run.

Question 10

Which of these is defined as a combination of investment assets held by an investor?

Accepted Answer

A)  Bundle 
B)  Market basket 
C)  Portfolio 
D)  All of the options 
A)  Bundle 
B)  Market basket 
C)  Portfolio 
D)  All of the options

Question 11

The past five monthly returns for K and Company are 4.25 percent,4.13 percent,−2.05 percent,3.25 percent,and 7.25 percent.What is the average monthly return?

Accepted Answer

A)  1.403 percent 
B)  1.744 percent 
C)  3.366 percent 
D)  4.186 percent 
A)  1.403 percent 
B)  1.744 percent 
C)  3.366 percent 
D)  4.186 percent

Question 12

MedTech Corp.stock was $50.95 per share at the end of last year.Since then,it paid a $0.45 per share dividend.The stock price is currently $62.50.If you owned 500 shares of MedTech,what was your percent return?

Accepted Answer

A)  7.20 percent 
B)  8.83 percent 
C)  22.67 percent 
D)  23.55 percent 
A)  7.20 percent 
B)  8.83 percent 
C)  22.67 percent 
D)  23.55 percent

Question 13

Which of these is the investor's combination of securities that achieves the highest expected return for a given risk level?

Accepted Answer

A)  Efficient portfolio 
B)  Modern portfolio 
C)  Optimal portfolio 
D)  Total portfolio 
A)  Efficient portfolio 
B)  Modern portfolio 
C)  Optimal portfolio 
D)  Total portfolio

Question 14

Which of the following is an index that tracks 500 companies,which allows for a great deal of diversification?

Accepted Answer

A)  Nasdaq 
B)  Fortune 500 
C)  S&P 500 
D)  Wall Street Journal 
A)  Nasdaq 
B)  Fortune 500 
C)  S&P 500 
D)  Wall Street Journal

Question 15

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

Accepted Answer

A)  Average return 
B)  Dollar return 
C)  Market return 
D)  Portfolio 
A)  Average return 
B)  Dollar return 
C)  Market return 
D)  Portfolio

Question 16

Which of the following statements is correct?

Accepted Answer

A)  A dominant portfolio has the best risk-return relationship as compared to other portfolios. 
B)  It is not necessarily true that when an investment achieves a high return that it is risky. 
C)  A low standard deviation means that the investment is less likely to achieve high returns, which means that it is more risky. 
D)  None of the statements are correct. 
A)  A dominant portfolio has the best risk-return relationship as compared to other portfolios. 
B)  It is not necessarily true that when an investment achieves a high return that it is risky. 
C)  A low standard deviation means that the investment is less likely to achieve high returns, which means that it is more risky. 
D)  None of the statements are correct.

Question 17

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

Accepted Answer

A)  Stocks A and B move downward at the same time. 
B)  Stocks C and D move in opposite directions at the same time. 
C)  Stocks E and F move upward at the same time. 
D)  Stocks G and H move randomly at the same time. 
A)  Stocks A and B move downward at the same time. 
B)  Stocks C and D move in opposite directions at the same time. 
C)  Stocks E and F move upward at the same time. 
D)  Stocks G and H move randomly at the same time.

Question 18

Rx Corp.stock was $60.00 per share at the end of last year.Since then,it paid a $1.00 per share dividend last year.The stock price is currently $62.50.If you owned 400 shares of Rx,what was your percent return?

Accepted Answer

A)  1.67 percent 
B)  4.17 percent 
C)  5.60 percent 
D)  5.83 percent 
A)  1.67 percent 
B)  4.17 percent 
C)  5.60 percent 
D)  5.83 percent

Question 19

Which of the following is incorrect?

Accepted Answer

A)  It is possible to combine assets that all move in the exact same fashion over time and gain the benefits of diversification. 
B)  Adding long-term Treasury bonds to a stock portfolio will reduce the risk of the portfolio. 
C)  The optimal portfolio is the one with the lowest amount of risk. 
D)  All of the statements are correct. 
A)  It is possible to combine assets that all move in the exact same fashion over time and gain the benefits of diversification. 
B)  Adding long-term Treasury bonds to a stock portfolio will reduce the risk of the portfolio. 
C)  The optimal portfolio is the one with the lowest amount of risk. 
D)  All of the statements are correct.

Question 20

If you invested $30,000 in Disney and $10,000 in Oracle and the two companies returned 6 percent and 12 percent respectively,what was your portfolio's return?

Accepted Answer

A)  18.0 percent 
B)  10.5 percent 
C)  9.0 percent 
D)  7.5 percent 
A)  18.0 percent 
B)  10.5 percent 
C)  9.0 percent 
D)  7.5 percent

Which of the following statements is correct?

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?

To find the percentage return of an investment:

FedEx Corp.stock ended the previous year at $113.39 per share.It paid a $0.40 per share dividend last year.It ended last year at $126.69.If you owned 300 shares of FedEx,what was your dollar return and percent return?

Consider the risk-return relationship in T-bills during each decade since 1950.Given this data,which of the following statements is correct?

Year to date,Company Y had earned a 7 percent return.During the same time period,Company R earned 9.25 percent and Company C earned −2.25 percent.If you have a portfolio made up of 35 percent Y,40 percent R,and 25 percent C,what is your portfolio return?

Which of these statements is true?

Which of these is defined as a combination of investment assets held by an investor?

The past five monthly returns for K and Company are 4.25 percent,4.13 percent,−2.05 percent,3.25 percent,and 7.25 percent.What is the average monthly return?

MedTech Corp.stock was $50.95 per share at the end of last year.Since then,it paid a $0.45 per share dividend.The stock price is currently $62.50.If you owned 500 shares of MedTech,what was your percent return?

Which of these is the investor's combination of securities that achieves the highest expected return for a given risk level?

Which of the following is an index that tracks 500 companies,which allows for a great deal of diversification?

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 statements is correct?

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

Rx Corp.stock was $60.00 per share at the end of last year.Since then,it paid a $1.00 per share dividend last year.The stock price is currently $62.50.If you owned 400 shares of Rx,what was your percent return?

Which of the following is incorrect?

If you invested $30,000 in Disney and $10,000 in Oracle and the two companies returned 6 percent and 12 percent respectively,what was your portfolio's return?

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

Exam 9: Characterizing Risk and Return

Which of the following statements is correct?

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?

To find the percentage return of an investment:

FedEx Corp.stock ended the previous year at $113.39 per share.It paid a $0.40 per share dividend last year.It ended last year at $126.69.If you owned 300 shares of FedEx,what was your dollar return and percent return?

Consider the risk-return relationship in T-bills during each decade since 1950.Given this data,which of the following statements is correct?

Year to date,Company Y had earned a 7 percent return.During the same time period,Company R earned 9.25 percent and Company C earned −2.25 percent.If you have a portfolio made up of 35 percent Y,40 percent R,and 25 percent C,what is your portfolio return?

Which of these statements is true?

Which of these is defined as a combination of investment assets held by an investor?

The past five monthly returns for K and Company are 4.25 percent,4.13 percent,−2.05 percent,3.25 percent,and 7.25 percent.What is the average monthly return?

MedTech Corp.stock was $50.95 per share at the end of last year.Since then,it paid a $0.45 per share dividend.The stock price is currently $62.50.If you owned 500 shares of MedTech,what was your percent return?

Which of these is the investor's combination of securities that achieves the highest expected return for a given risk level?

Which of the following is an index that tracks 500 companies,which allows for a great deal of diversification?

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 statements is correct?

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

Rx Corp.stock was $60.00 per share at the end of last year.Since then,it paid a $1.00 per share dividend last year.The stock price is currently $62.50.If you owned 400 shares of Rx,what was your percent return?

Which of the following is incorrect?

If you invested $30,000 in Disney and $10,000 in Oracle and the two companies returned 6 percent and 12 percent respectively,what was your portfolio's return?

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