Exam 10: Risk and Return: Lessons From Market History

Little John Industries sold for $1.90 on January 1 and ended the year at a price of $2.50.In addition,the stock paid dividends of $0.20 per share.Calculate Little John's dividend yield,capital gains yield,and total rate of return for the 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?

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

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

A portfolio of large company stocks would contain which one of the following types of securities?

The average squared difference between the actual return and the average return is called the:

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

You purchased 300 shares of Deltona,Inc.stock for $44.90 a share.You have received a total of $630 in dividends and $14,040 in proceeds from selling the shares.What is your capital gains yield on this stock?

The average risk premium on U.S.Treasury bills over the period of 1926 to 2012 was _____%.

Over the period of 1926 to 2012,small company stocks had an average return of __%.

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?

The return earned in an average year over a multi-year period is called the _____ average return.

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

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 2011. IV.had an average value of about 20% for the period 1926 to 2011.

The market portfolio of common stocks earned 14.7% in one year.Treasury bills earned 5.7%.What was the real risk premium on equities?

The total annual returns on large company common stocks averaged 11.8% from 1926 to 2012,small company stocks averaged 16.5%,long-term government bonds averaged 6.1%,while Treasury Bills averaged 3.6%.What was the average risk premium earned by long-term government bonds,and small company stocks respectively?

How much of total world stock market capitalization is from the United States in 2013?

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?

A stock had the following prices and dividends.What is the geometric average return on this stock?