Question 1

Why do the arithmetic average return and the geometric return differ?

Accepted Answer

The answer of Why do the arithmetic average return and...

Question 2

The expected rate of return is the weighted average of the possible returns for an investment.

Accepted Answer

A) True 
 B)False

Question 3

Less risky investments have lower standard deviations than do more risky investments.

Accepted Answer

A) True 
 B)False

Question 4

If a market is weak form efficient,an investor can make higher than expected profits by studying the past price patterns of a share.

Accepted Answer

A) True 
 B)False

Question 5

Burson Group Limited.is selling for $50.00 per share today.In one year,Burson will be selling for $48.00 per share,and the dividend for the year will be $3.00.What is the cash return on Burson share?

Accepted Answer

A) $51.00 
B) $1.00 
C) $2.00 
D) $3.00

Question 6

The expected rate of return is the sum of each possible return times it likelihood of occurrence.

Accepted Answer

A) True 
 B)False

Question 7

The cash return on an investment is calculated as purchase price-selling price.

Accepted Answer

A) True 
 B)False

Question 8

You have invested in a project that has the following cash return schedule: Probability of
Cash Return Occurrence
$40 .15
$50 .20
$60 .30
$70 .30
$80 .05
What is the expected value of the investment's cash return (Round to the nearest $1. )

Accepted Answer

A) $60 
B) $65 
C) $58 
D) $70

Question 9

During the global financial crisis of 2007-2009,returns on real estate investment trusts (REITS)and shares moved in opposite directions.

Accepted Answer

A) True 
 B)False

Question 10

Using the following information for an M2 Group Limited share,calculate their expected return and standard deviation.
State Probability Return
Boom 20% 40%
Normal 60% 15%
Recession 20% (20%)

Accepted Answer

The answer of Using the following information for an M2...

Question 11

Riskier investments have traditionally had lower returns than less risky investments have had.

Accepted Answer

A) True 
 B)False

Exam 7: An Introduction to Risk and Return - History of Financial Market Returns

Why do the arithmetic average return and the geometric return differ?

The expected rate of return is the weighted average of the possible returns for an investment.

Less risky investments have lower standard deviations than do more risky investments.

If a market is weak form efficient,an investor can make higher than expected profits by studying the past price patterns of a share.

Burson Group Limited.is selling for $50.00 per share today.In one year,Burson will be selling for $48.00 per share,and the dividend for the year will be $3.00.What is the cash return on Burson share?

The expected rate of return is the sum of each possible return times it likelihood of occurrence.

The cash return on an investment is calculated as purchase price-selling price.

You have invested in a project that has the following cash return schedule: Probability of Cash Return Occurrence $40 .15 $50 .20 $60 .30 $70 .30 $80 .05 What is the expected value of the investment's cash return (Round to the nearest $1. )

During the global financial crisis of 2007-2009,returns on real estate investment trusts (REITS)and shares moved in opposite directions.

Using the following information for an M2 Group Limited share,calculate their expected return and standard deviation. State Probability Return Boom 20% 40% Normal 60% 15% Recession 20% (20%)

Riskier investments have traditionally had lower returns than less risky investments have had.