Exam 8: Risk, return, and Portfolio Theory

Steve bought a share of Toronto Skates Inc.three years ago for $45.00.He was paid two annual dividends of $4.50 in the past two years.If the stock price today is $ 48.50,what is the annual holding period return of the stock?

Which of the following statements is FALSE?

Laura purchased a share of MVP Company for $26.43 one year ago.The stock paid a quarterly dividend of $0.50 during the year.What is the capital gain yield if the current stock price is $28.26?

Amazon's new mobile phone Fire spectacularly under-performed analyst expectations leading to a drop in share price.This is an example of:

The standard deviation and expected returns for 4 portfolios (A,B,C,and D)are graphed on the following efficient frontier: Which of the following portfolios are attainable?

The efficient frontier is constructed by:

The expected returns for ABC Company and XYZ Company are 12 percent and 9 percent,respectively.The standard deviation is 20 percent for ABC and 15 percent for XYZ.What is the portfolio standard deviation if one-third of the portfolio is in ABC and the two securities have perfect positive correlation?

Given the following forecasts,what is the expected return for a portfolio that has $1,500 invested in Stock A and $4,500 invested in Stock B?

Which of the following is NOT a correct statement about income yield?

The closing prices for Stock B from December to June are: $42.90,$44.20,$51.50,$49.60,$45.50,$46.30,and $42.50.What is the standard deviation of returns over the six-month period?

The geometric average quarterly return of ROM Company was 5 percent for the previous year.What was the return for the third quarter if the returns for the first,second,and fourth quarters were 10 percent,-9.05 percent,and 8 percent,respectively?

Suppose you have a total return of 8 percent on the 500 shares of XYZ Company that you bought for $9,590 last year.XYZ paid four equal quarterly dividends during the year.What would be the quarterly dividend if the current stock price is $18.64 per share?

Suppose you plan to create a portfolio with two securities: Tobin and Bino,with weights to be greater than or equal to zero.The expected return of Tobin is 10 percent with a standard deviation of 12 percent.The expected return of Bino is 16 percent with a standard deviation of 20 percent.The correlation between the two securities is 0.30. A) What percentage of your investment should be invested in Tobin to obtain a portfolio standard deviation of 12.2638 percent? B) What is the expected return of the portfolio?

A share of Oedipus Construction Company was selling for $32.16 one year ago.The stock paid an annual dividend of $0.25 during the year.What is the capital gain yield if the current stock price is $34.02?

Given the following forecasts,what is the variance of returns?

Which of the following statements is TRUE?

What is the expected return for a portfolio that has $1,000 invested in Stock X,$1,500 invested in Stock Y,and $2,500 invested in Stock Z,if the expected returns on Stock X,Stock Y,and Stock Z are 10%,12%,and 15%,respectively?

Calculate the correlation between the two stocks.

The expected return on Alpha Inc.is 8 percent and the expected return on Beta Inc.is 24 percent.What is the trade-off between investing in Alpha and Beta if the portfolio weight in Alpha is increased by 1%?

Which of the following statements is TRUE?