Exam 10: Risk and Return Lessons From Market History

The arithmetic average return on your portfolio for the past five years was 8.4 percent.Assume you earned -6 percent,25 percent,10 percent,and 6 percent for four of those five years.What rate of return did you earn in the fifth year?

Assume today is December 31,2012.Approximately how long has it been since the annual rate of inflation as measured by the Consumer Price Index has been negative?

Assume you are analyzing stock market risk premiums over time.Which one of these would be the computation to use to compute the standard error of those premiums?

Deltona stock sold for $38.60 a share one year ago and pays an annual dividend of $1.55.What does the stock price need to be today for the annual capital gain to be 7.5 percent?

Kurt's Toy Co.has had total annual returns for the past five years of -5 percent,8 percent,-3 percent,20 percent,and 12 percent.What is the 5-year holding period return?

Over the long-term,which one of the following is a correct statement concerning risk premium?

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

One year ago,Ceegee purchased 200 shares of stock at a price of $18.97 per share.Over the last year,she received total dividend income of $164.What is the dividend yield?

You just sold 250 shares of stock for $37.75 a share.One year ago,you purchased the stock for $40.50 a share and have received dividends totaling $2.64 per share.What is your capital gain in dollars?

A stock had returns of 14 percent,3 percent,9 percent,and -12 percent annually for the past four years.What is the mean and variance of these returns?

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

What is the difference between an arithmetic and a geometric average? Is one preferred over the other?

Which one of these statements must be correct?

Suppose you have $100,000 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 percent government insured and you are taking unnecessary risks by being in the stock market.How would you respond?

Assume a $1 investment in a stock 65 years ago is now worth $211.46.What is the geometric average return for the period?

What are the arithmetic and geometric average returns for a stock with annual returns of 11 percent,14 percent,-2 percent and 6 percent?

The return pattern on your favorite stock has been 9 percent,8 percent,-2 percent,15 percent,and 21 percent over the last five years.What is the stock's arithmetic average return and holding period return?

How did long-term U.S.Treasury bonds perform in 2008?

Assume that for a 10-year period inflation averaged 2.8 percent,U.S.Treasury bills returned 3.3 percent,and long-term corporate bonds earned 5.9 percent.What was the real rate of return on long-term corporate bonds for the period?

Which of the following statements concerning the standard deviation are correct? I.The greater the standard deviation,the lower the risk. II.The standard deviation is a measure of volatility. III.The higher the standard deviation,the less certain the rate of return in any one given year. IV.The higher the standard deviation,the higher the expected return.