Exam 4: Return and Risk

The holding period return (HPR) can appropriately be used to

The present value of $10,000 discounted at 5% per year and received at the end of 5 years is

Annual yield is a less meaningful measure of an investment's performance than holding period return if the holding period is other than 1 year.

The stock of Plomb Co. falls sharply on news that its CEO has drowned in a boating accident while on vacation. This is an example of

Madison purchased a new car for $23,000. She was allowed $3,000 for her trade in and financed the remainder over 48 months at a rate of 4% per year. How much is her monthly payment?

To compute the present value of $1,000 annuity received at the end of each of the next three years and discounted at the rate of 5% per year, you should use he following EXCEL command.

An ordinary annuity is defined as an annuity for which the cash flows occur at the beginning of each year or payment period.

The stated rate of interest is equal to the true rate of interest when

Which one of the following is an example of an annuity?

When the rate of return is equal to the discount rate

An investment costs $3,500 today. This investment is expected to produce annual cash flows of $1,200, $1,400, $1,300 and $1,100, respectively, over the next four years. What is the internal rate of return on this investment?

Stocks in which of the following industries may be impacted by government actions?

The greater the dispersion around an asset's expected return, the greater the risk.

Sydney invested $10,000 for an indefinite period at 5% per year. At the end of each year, she receives a a $500 check for interest earned. This type of account pays simple interest.

Which of the following choices is in the correct order from less risk to more risk?

The required rate of return on the Cosmos Corporation's common stock is 10%, the current real rate of return in the market is 1%, and the inflation rate is 3%. In this case, the risk premium associated with Cosmos stock is

Investors can be confidently predict future returns on an investment by studying its past performance.

The reluctance of Congress to tinker with tax rates and deductions has virtually eliminated tax risk for U.S. businesses.

Historically speaking, the standard deviation of returns on U.S. Treasury Bills is zero.

The difficulty many investors experienced in selling mortgage based securities during the financial crisis of 2009 is an example of