Question 1

Using the following information for McDonovan,Inc.'s stock,calculate their expected return and standard deviation.

Accepted Answer

The answer of Using the following information for McDonovan,Inc.'s stock,calculate...

Question 2

How much money did Roddy Richards receive when he sold his shares of W.M.D.?

Accepted Answer

A) $12,014.88 
B) $12,398.42 
C) $13,663.47 
D) $14,184.73 
A) $12,014.88 
B) $12,398.42 
C) $13,663.47 
D) $14,184.73

Question 3

Treasury Bills have less default risk than do Government Bonds.

Accepted Answer

A) True 
 B)False

Question 4

Are markets moving toward being more efficient or toward being less efficient?

Accepted Answer

Empirical evidence shows that since abou

Question 5

The higher the standard deviation,the less risk the investment has.

Accepted Answer

A) True 
 B)False

Question 6

Expected return and realized return are the same thing.

Accepted Answer

A) True 
 B)False

Question 7

The holding period return is always positive.

Accepted Answer

A) True 
 B)False

Question 8

Investors make different investment choices partially because individuals do not all have the same tolerance for risk.

Accepted Answer

A) True 
 B)False

Question 9

What is the arithmetic average return on her stock if she sells it five years from today?

Accepted Answer

A) 1.92% 
B) 3.98% 
C) 6.47% 
D) 7.11% 
A) 1.92% 
B) 3.98% 
C) 6.47% 
D) 7.11%

Question 10

You purchased the stock of Sargent Motors at a price of $75.75 one year ago today.If you sell the stock today for $89.00,what is your holding period return?

Accepted Answer

A) 35.00% 
B) 12.50% 
C) 17.50% 
D) 25.00% 
A) 35.00% 
B) 12.50% 
C) 17.50% 
D) 25.00%

Question 11

If an individual with inside information can make higher than expected profits,the market is no more than semi-strong form efficient.

Accepted Answer

A) True 
 B)False

Question 12

Stock prices go up when there is positive information about a company,and go down when there is negative information about the company.

Accepted Answer

A) True 
 B)False

Question 13

Why do the arithmetic average return and the geometric return differ?

Accepted Answer

The arithmetic average return does not t

Question 14

Marcus Berger invested $9842.33 in Hawkeyehats,Inc.four years ago.He sold the stock today for $11,396.22.What is his geometric average return?

Accepted Answer

A) There is insufficient information to derive an answer. 
B) 2.98% 
C) 3.73% 
D) 3.95% 
A) There is insufficient information to derive an answer. 
B) 2.98% 
C) 3.73% 
D) 3.95%

Question 15

The risk-return tradeoff tells us that expected returns should be higher on investments that have higher risk.

Accepted Answer

A) True 
 B)False

Question 16

Historically,in the United States stocks have had higher returns and greater volatility than have government bonds.

Accepted Answer

A) True 
 B)False

Question 17

Each of the following would tend to weaken the Efficient Market Hypothesis EXCEPT:

Accepted Answer

A) There is publicly available information that Boeing Aircraft has procured a contract to build 25 planes for the U.S.Government and the price of Boeing quickly goes up. 
B) ACG,Inc.performed well for the past six months,but they just lost a major distribution contract,but the price of ACG stock continues to go up. 
C) Louisville Slugger,Inc. ,gets a contract to supply bats for Little League play,a contract it never had before,and stock price remains stable. 
D) Disney corporation,a growth company,opens a new theme park,which investors expect will do tremendously well,and the stock price stays stable,while Urban Electric Company,which has a set infrastructure,and generates 95% of its earnings from assets it owns,outperforms Disney. 
A) There is publicly available information that Boeing Aircraft has procured a contract to build 25 planes for the U.S.Government and the price of Boeing quickly goes up. 
B) ACG,Inc.performed well for the past six months,but they just lost a major distribution contract,but the price of ACG stock continues to go up. 
C) Louisville Slugger,Inc. ,gets a contract to supply bats for Little League play,a contract it never had before,and stock price remains stable. 
D) Disney corporation,a growth company,opens a new theme park,which investors expect will do tremendously well,and the stock price stays stable,while Urban Electric Company,which has a set infrastructure,and generates 95% of its earnings from assets it owns,outperforms Disney.

Question 18

If a market has weak form efficiency,an investor can make higher than expected profits by studying the past price patterns of a stock.

Accepted Answer

A) True 
 B)False

Question 19

An investor who wishes to hold a stock for five years will be most interested in geometric average rather than in the arithmetic average return.

Accepted Answer

A) True 
 B)False

Question 20

Spartan Sofas,Inc.is selling for $50.00 per share today.In one year,Spartan will be selling for $48.00 per share,and the dividend for the year will be $3.00.What is the cash return on Spartan stock?

Accepted Answer

A) 0% 
B) 2% 
C) 6% 
D) 10% 
A) 0% 
B) 2% 
C) 6% 
D) 10%

Using the following information for McDonovan,Inc.'s stock,calculate their expected return and standard deviation.

How much money did Roddy Richards receive when he sold his shares of W.M.D.?

Treasury Bills have less default risk than do Government Bonds.

Are markets moving toward being more efficient or toward being less efficient?

The higher the standard deviation,the less risk the investment has.

Expected return and realized return are the same thing.

The holding period return is always positive.

Investors make different investment choices partially because individuals do not all have the same tolerance for risk.

What is the arithmetic average return on her stock if she sells it five years from today?

You purchased the stock of Sargent Motors at a price of $75.75 one year ago today.If you sell the stock today for $89.00,what is your holding period return?

If an individual with inside information can make higher than expected profits,the market is no more than semi-strong form efficient.

Stock prices go up when there is positive information about a company,and go down when there is negative information about the company.

Why do the arithmetic average return and the geometric return differ?

Marcus Berger invested $9842.33 in Hawkeyehats,Inc.four years ago.He sold the stock today for $11,396.22.What is his geometric average return?

The risk-return tradeoff tells us that expected returns should be higher on investments that have higher risk.

Historically,in the United States stocks have had higher returns and greater volatility than have government bonds.

Each of the following would tend to weaken the Efficient Market Hypothesis EXCEPT:

If a market has weak form efficiency,an investor can make higher than expected profits by studying the past price patterns of a stock.

An investor who wishes to hold a stock for five years will be most interested in geometric average rather than in the arithmetic average return.

Spartan Sofas,Inc.is selling for $50.00 per share today.In one year,Spartan will be selling for $48.00 per share,and the dividend for the year will be $3.00.What is the cash return on Spartan stock?

Getting Started-Principles of Finance

Firms and the Financial Market

Understanding Financial Statements, taxes, and Cash Flows

Financial Analysis-Sizing up Firm Performance

Time Value of Money-The Basics

The Time Value of Money-Annuities and Other Topics

Risk and Return-Capital Market Theory

Debt Valuation and Interest Rates

Stock Valuation

Investment Decision Criteria

Analyzing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Financial Forecasting and Planning

Working Capital Management

International Business Finance

Corporate Risk Management

Filters

Exam 7: An Introduction to Risk and Return-History of Financial Market Returns

Using the following information for McDonovan,Inc.'s stock,calculate their expected return and standard deviation.

How much money did Roddy Richards receive when he sold his shares of W.M.D.?

Treasury Bills have less default risk than do Government Bonds.

Are markets moving toward being more efficient or toward being less efficient?

The higher the standard deviation,the less risk the investment has.

Expected return and realized return are the same thing.

The holding period return is always positive.

Investors make different investment choices partially because individuals do not all have the same tolerance for risk.

What is the arithmetic average return on her stock if she sells it five years from today?

You purchased the stock of Sargent Motors at a price of $75.75 one year ago today.If you sell the stock today for $89.00,what is your holding period return?

If an individual with inside information can make higher than expected profits,the market is no more than semi-strong form efficient.

Stock prices go up when there is positive information about a company,and go down when there is negative information about the company.

Why do the arithmetic average return and the geometric return differ?

Marcus Berger invested $9842.33 in Hawkeyehats,Inc.four years ago.He sold the stock today for $11,396.22.What is his geometric average return?

The risk-return tradeoff tells us that expected returns should be higher on investments that have higher risk.

Historically,in the United States stocks have had higher returns and greater volatility than have government bonds.

Each of the following would tend to weaken the Efficient Market Hypothesis EXCEPT:

If a market has weak form efficiency,an investor can make higher than expected profits by studying the past price patterns of a stock.

An investor who wishes to hold a stock for five years will be most interested in geometric average rather than in the arithmetic average return.

Spartan Sofas,Inc.is selling for $50.00 per share today.In one year,Spartan will be selling for $48.00 per share,and the dividend for the year will be $3.00.What is the cash return on Spartan stock?

Getting Started-Principles of Finance

Firms and the Financial Market

Understanding Financial Statements, taxes, and Cash Flows

Financial Analysis-Sizing up Firm Performance

Time Value of Money-The Basics

The Time Value of Money-Annuities and Other Topics

Risk and Return-Capital Market Theory

Debt Valuation and Interest Rates

Stock Valuation

Investment Decision Criteria

Analyzing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Financial Forecasting and Planning

Working Capital Management

International Business Finance

Corporate Risk Management

Filters