Exam 10: Risk and Return: Lessons From Market History

The market portfolio of common stocks earned 20.4% last year.Treasury bills earned 5.3% on average last year.The average inflation rate was 2.5%.What was the real return on T-Bills?

The normal distribution is a theoretical distribution for a population.The distribution can be used to estimate how risky a cash flow or return is.If the mean is 12% and the standard deviation is 22.6%,what is the range of possible returns for a 2 standard deviation change and what percentage of all observations would fall within 2 standard deviations?

A security has an expected return of 10% and a standard deviation of .03.If the security is normally distributed,then about 68% of the time,the security return will be

The prices for IMB over the last 3 years are given below.Assuming no dividends were paid,what was the 3-year holding period return?

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

The market portfolio of common stocks earned 20.4% last year.Treasury bills earned 5.3% on average last year.The average inflation rate was 2.5%.What was the equity risk premium?

If the expected return on the market is 16%,then using the historical risk premium of 8.5%,the current risk-free rate is:

Excelsior share are currently selling for $25.00 each.You bought 200 shares one year ago at $24 and received dividend payments of $1.50 per share.What was your percentage rate of return?

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.

Kids Toy Co.has had total returns over the past five years of 0%,7%,-2%,10%,and 12%.What is the percentage change in wealth over the five years

Suppose you own a risky asset with an expected return of 12% and a standard deviation of 20%.If the returns are normally distributed,the approximate probability of receiving a return greater than 32% is:

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 total dollar capital gain and total dollar return?

Suppose you own a risky asset with an expected return of 12% and a standard deviation of 20%.If the returns are normally distributed,the approximate probability of receiving a return greater than 72%,or less than -48% is:

The capital gains yield plus the dividend yield on a security is called the:

A stock has returns of 3%,18%,-24%,and 16% for the past four years.Based on this information,what is the 95% probability range for any one given year?

A year ago,you purchased 300 shares of IXC Technologies,Inc.stock at a price of $9.03 per share.The stock pays an annual dividend of $.10 per share.Today,you sold all of your shares for $28.14 per share.What is your total dollar return on this investment?

The market portfolio of common stocks earned 14.7% last year.Treasury bills earned 5.7% on average last year.The average inflation rate was 4.0%.What was the real risk premium on equities?

Capital gains are defined as:

If the average return on common stocks was 13.3%,the average Treasury bill rate was 3.8%,and the average inflation rate was 3.2% what would be the expected nominal and approximate real market return for common stocks if the Treasury bill rate is expected to be 5.5% and the inflation rate is 4.1%?

The total annual returns on common stocks averaged 13.3% from 1957 to 2003.Small company stocks averaged 10.64%,long-term bonds averaged 8.96%,while Treasury Bills averaged 6.8%.What was the average risk premium earned by long-term Bonds,and small company stocks respectively?