Exam 10: Risk and Return Lessons From Market History

Suppose you own a risky asset with an expected return of 16.3 percent and a standard deviation of 31.3 percent.If the returns are normally distributed,the approximate probability of losing 15 percent or more in a single year is ____ percent.

Which one of the following years had the lowest rate of return for the S&P 500 Index?

Which one of these categories of securities has had the lowest volatility of returns over the period of 1926 through 2012?

Based on the period of 1926 through 2012,which category of securities has outperformed all of the other categories?

Assume a $1 investment in a stock 36 years ago is now worth $54.82.What is the geometric average return for the period?

What does market history tell us about the future performance of various securities?

Which one of these ratios best represents the size of the United States stock market as compared to the world stock market?

On average,for the period 1926 through 2012:

Suppose an investor made this statement: "I will be perfectly happy with my investments if I can just earn a three percent real rate of return each year." Based on this statement,what can you determine about this investor?

Exo shares are currently selling for $25.75 each.You bought 200 shares one year ago at $24 a share and received dividend payments of $1.60 a share.What is the percentage capital gain for the period?

A stock had returns of 12 percent,6 percent,14 percent,and -3 percent annually for the past four years.What is the mean and standard deviation of these returns?

Assume the market portfolio of common stocks earned 14.1 percent in one year while U.S.Treasury bills earned 4.4 percent and inflation averaged 4.6 percent.What was the market risk premium?

Assume you purchased 400 shares of stock for $20 a share,sold the stock for $8,392 and received a total of $550 in dividends.What was total dollar capital gain and total dollar return?

Which one of these statements correctly reflects historical history from 1926 through 2012?

What are the arithmetic and geometric average returns for a stock with annual returns of 4 percent,12 percent,-8 percent and 9 percent?

A stock earned a real average arithmetic rate of return of 5.65 percent for a 4-year period.During that period inflation averaged 3.6 percent while U.S.Treasury bills returned 4.2 percent.Assume the stock had annual nominal returns of 8 percent,13 percent and 12 percent for three of the four years.What nominal rate of return did the stock earn in the fourth year?

A stock had returns of 7 percent,12 percent,-10 percent,and 17 percent annually over the past four years.What is the geometric average return for this time period?

Suppose a portfolio had an arithmetic average return of 8 percent for a 4-year period.Which one of these statements must be true regarding this portfolio for the period?

One year ago,Ted purchased 100 shares of stock at $18.79 a share.Today,he received a total of $130 in dividends and sold his shares for a total of $1,211.What was his total rate of return?

A stock had returns of 7 percent,15 percent,and -1 percent for the past three years.Based on these returns,what is the probability that this stock will earn at least 15 percent in any one given year?