Exam 5: Risk and Return: Past and Prologue

If you want to measure the performance of your investment in a fund,including the timing of your purchases and redemptions you should calculate the __________.

Historically the best asset for the long term investor wanting to fend off the threats of inflation and taxes while making his money grow has been ____.

You put up $50 at the beginning of the year for an investment.The value of the investment grows 4% and you earn a dividend of $3.50.Your HPR was ____.

During the 1926 to 2008 period the geometric mean return on small firm stocks was ______.

You invest $10,000 in a complete portfolio.The complete portfolio is composed of a risky asset with an expected rate of return of 15% and a standard deviation of 21% and a treasury bill with a rate of return of 5%.How much money should be invested in the risky asset to form a portfolio with an expected return of 11%?

During the 1926 to 2008 period which one of the following asset classes provided the lowest real return?

Your investment has a 20% chance of earning a 30% rate of return,a 50% chance of earning a 10% rate of return and a 30% chance of losing 6%.What is your expected return on this investment?

You invest $1,000 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 16% and a standard deviation of 20% and a treasury bill with a rate of return of 6%. -__________ of your complete portfolio should be invested in the risky portfolio if you want your complete portfolio to have a standard deviation of 9%.

Two assets have the following expected returns and standard deviations when the risk-free rate is 5%: An investor with a risk aversion of A = 3 would find that _________________ on a risk return basis.

If you require a real growth in the purchasing power of your investment of 8%,and you expect the rate of inflation over the next year to be 3%,what is the lowest nominal return that you would be satisfied with?

The geometric average of -12%,20% and 25% is _________.

What is the geometric average return over one year if the quarterly returns are 8%,9%,5%,and 12%,respectively?

You have the following rates of return for a risky portfolio for several recent years. Assume that the stock pays no dividends -What is the geometric average return for the period?

When calculating the variance of a portfolio's returns squaring the deviations from the mean results in ________. I.preventing the sum of the deviations from always equaling zero II.exaggerating the effects of large positive and negative deviations III.a number in units of percentage of returns

You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of treasury bills that pay 5% and a risky portfolio, P, constructed with 2 risky securities X and Y. The optimal weights of X and Y in P are 60% and 40% respectively. X has an expected rate of return of 14% and Y has an expected rate of return of 10%. -If you decide to hold 25% of your complete portfolio in the risky portfolio and 75% in the treasury bills then the dollar values of your positions in X and Y respectively would be __________ and _________.

The dollar weighted return is the _________.

During the 1985 to 2008 period the Sharpe ratio was greatest for which of the following asset classes?

The holding period return on a stock was 25%.Its ending price was $18 and its beginning price was $16.Its cash dividend must have been _________.

Both investors and gamblers take on risk.The difference between an investor and a gambler is that an investor _______.

You invest all of your money in one year T-bills.Which of the following statements is/are correct? I.Your nominal return on the T-bills is riskless. II.Your real return on the T-bills is riskless. III.Your nominal Sharpe measure is zero.