Exam 10: Risk and Return: Lessons From Market History

You bought 100 shares of stock at $20 each.At the end of the year, you received a total of $400 in dividends, and your stock was worth $2,500 total.What was your total return?

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 stock had returns of 8%, 14%, and 2% for the past three years.Based on these returns, what is the probability that this stock will earn at least 20% in any one given year?

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?

Estimates using the arithmetic average will probably tend to _____ values over the long-term while estimates using the geometric average will probably tend to _____ values over the short-term.

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

Winslow, Inc.stock is currently selling for $40 a share.The stock has a dividend yield of 3.8%.How much dividend income will you receive per year if you purchase 500 shares of this stock?

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 dollar value of the world stock market capitalization, from largest to smallest is:

The long term inflation rate average was 3.2% and you invested in long term corporate bonds over the same period which earned 6.1%.What was the average risk premium you earned?

The variance of returns is computed by dividing the sum of the:

A stock had returns of 6%, 13%, -11%, and 17% over the past four years.What is the geometric average return for this time period?

You just sold 200 shares of Langley, Inc.stock at a price of $38.75 a share.Last year you paid $41.50 a share to buy this stock.Over the course of the year, you received dividends totaling $1.64 per share.What is your capital gain on this investment?

What are the lessons learned from capital market history? What evidence is there to suggest these lessons are correct?

Capital market history shows us that the average return relationship from lowest to highest between securities is:

A stock 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 stock will earn at least 23% in any one given year?

Kids Toy Co.has had total returns over the past five years of 0%, 7%, -2%, 10%, and 12%.What was the arithmetic average return on this stock?

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

The standard deviation on small company stocks: I.is greater than the standard deviation on large company stocks. II.is less than the standard deviation on large company stocks. III.had an average value of about 33% for the period 1926 to 2008. IV.had an average value of about 20% for the period 1926 to 2008.

The average compound return earned per year over a multi-year period is called the _____ average return.