Question 1

A bond has an average return of 11.2 percent and a standard deviation of 14.6 percent.What range of returns would you expect to see 68 percent of the time on this security?

Accepted Answer

A)  -18 percent to 43.9 percent
B)  -18 percent to 40.1 percent
C)  -3.4 percent to 27.8 percent
D)  -3.4 percent to 25.8 percent
E)  -2.5 percent to 13.9 percentF) A) and B)
G) B) and E)

Question 2

One year ago,you purchased 600 shares of a stock.This morning you sold those shares and realized a total return of 3.1 percent.Given this information,you know for sure the:

Accepted Answer

A)  stock price increased by 3.1 percent over the last year.
B)  stock increased in value over the past year.
C)  stock paid a dividend.
D)  dividend yield is greater than zero.
E)  sum of the dividend yield and the capital gains yield is 3.1 percent.F) A) and E)
G) A) and B)

Question 3

Over the past four years,a stock produced returns of 13 percent,-9 percent,8 percent,and 14 percent,respectively.Based on these four years,what range of returns would you expect to see 99 percent of the time?

Accepted Answer

A)  -25.48 percent to 38.48 percent
B)  -22.39 percent to 26.41 percent
C)  -32.39 percent to 48.56 percent
D)  -18.46 percent to 22.41 percent
E)  -18.46 percent to 24.39 percentF) B) and C)
G) A) and D)

Question 4

Which one of the following categories has the widest frequency distribution of returns for the period 1926-2014?

Accepted Answer

A)  Small-company stocks
B)  U.S.Treasury bills
C)  Long-term government bonds
D)  Inflation
E)  Large-company stockF) A) and E)
G) A) and D)

Question 5

Hercules Movers pays a constant annual dividend of $1.48 per share on its stock.Last year at this time,the market rate of return on this stock was 15.7 percent.Today,the market rate has fallen to 13.3 percent.What would your capital gains yield have been if you had purchased this stock one year ago and then sold the stock today?

Accepted Answer

A)  -15.29 percent
B)  -22.03 percent
C)  16 percent
D)  16.47 percent
E)  18.05 percentF) A) and C)
G) A) and E)

Question 6

The average risk premium on long-term government bonds for the period 1926-2014 was equal to:

Accepted Answer

A)  zero.
B)  1 percent.
C)  the rate of return on the bonds plus the corporate bond rate.
D)  the rate of return on the bonds minus the T-bill rate.
E)  the rate of return on the bonds minus the inflation rate.F) C) and D)
G) B) and E)

Question 7

A stock has produced returns of 19 percent,6 percent,-21 percent,-2 percent,and 14 percent for the past five years,respectively.What is the standard deviation of these returns?

Accepted Answer

A)  14.65 percent
B)  8.87 percent
C)  9.23 percent
D)  15.71 percent
E)  16.64 percentF) A) and D)
G) C) and E)

Question 8

Assume that long-term corporate bonds had an average return of 6.4 percent and a standard deviation of 2.9 percent for a 50-year period.What range of returns would you expect to see on these bonds 68 percent of the time?

Accepted Answer

A)  3.5 percent to 9.3 percent
B)  3.5 percent to 10.9 percent
C)  2.9 percent to 6.4 percent
D)  6 percent to 11.9 percent
E)  6 percent to 12.2 percentF) A) and D)
G) A) and E)

Question 9

Over the past four years,the annual percentage returns on large-company stocks were 15,7,4,and 18 percent.For the same time period,U.S.Treasury bills produced the returns of 6,3,2,and 4 percent.Inflation averaged 2.8 percent over the four-year period.The average real rate of return on large-company stocks was ___ percent as compared to _____ percent for Treasury bills.

Accepted Answer

A)  6.47; .92
B)  6.47; 1.08
C)  7.98; .92
D)  7.98; 1.08
E)  7.98; 1.22F) All of the above
G) A) and B)

Question 10

Over the past four years,a stock produced returns of 6 percent,8 percent,19 percent,and 2 percent,respectively.Based on these four years,what range of returns would you expect to see 95 percent of the time?

Accepted Answer

A)  -.58 percent to 31.33 percent
B)  -5.80 percent to 27.02 percent
C)  -.23 percent to 24.39 percent
D)  -.02 percent to 24.39 percent
E)  -5.80 percent to 23.30 percentF) A) and C)
G) B) and E)

Question 11

Which one of the following is the most apt to have the largest risk premium in the future based on the historical record for 1926-2014?

Accepted Answer

A)  U.S.Treasury bills
B)  Large-company stocks
C)  Long-term government debt
D)  Small-company stocks
E)  Long-term corporate debtF) B) and E)
G) A) and D)

Question 12

Over the period of 1926-2014:

Accepted Answer

A)  long-term government bonds underperformed long-term corporate bonds.
B)  small-company stocks underperformed large-company stocks.
C)  exceeded the rate of return on U.S.Treasury bills.
D)  U.S.Treasury bills outperformed long-term government bonds.
E)  large-company stocks outperformed all other investment categories.F) All of the above
G) B) and E)

Question 13

Which one of the following combinations will always result in an increased dividend yield?

Accepted Answer

A)  Increase in the stock price combined with a lower dividend amount
B)  Increase in the stock price combined with a higher dividend amount
C)  Decrease in the stock price combined with a lower dividend amount
D)  Decrease in the stock price combined with a higher dividend amount
E)  Increase in the stock price combined with a constant dividend amountF) C) and E)
G) B) and C)

Question 14

Which one of the following is the hypothesis that securities markets are efficient?

Accepted Answer

A)  Geometric market hypothesis
B)  Standard deviation hypothesis
C)  Efficient markets hypothesis
D)  Capital market hypothesis
E)  Financial markets hypothesisF) C) and D)
G) B) and C)

Question 15

A security produced returns of 11 percent,7 percent,9 percent,13 percent,and -14 percent over the past five years,respectively.Based on these five years,what is the probability that this stock will earn more than 16.16 percent in any one given year?

Accepted Answer

A)  .5 percent
B)  1.0 percent
C)  2.5 percent
D)  5.0 percent
E)  16.0 percentF) A) and D)
G) A) and C)

Question 16

Alpha Industries stock had returns of 17 percent,-11 percent,9 percent,and 2 percent for four of the last five years,respectively.The average return of the stock over this period was 8.7 percent.What is the standard deviation of the stock's returns?

Accepted Answer

A)  14.67 percent
B)  12.90 percent
C)  15.14 percent
D)  15.47 percent
E)  14.31 percentF) B) and D)
G) B) and E)

Question 17

A stock has produced returns of 11.9 percent,5.6 percent,16.4 percent,and -4.2 percent over the past four years,respectively.What is the geometric average return?

Accepted Answer

A)  7.14 percent
B)  7.47 percent
C)  6.83 percent
D)  6.91 percent
E)  7.02 percentF) A) and B)
G) A) and E)

Question 18

The rate of return on which one of the following has a risk premium of 0%?

Accepted Answer

A)  Long-term government bonds
B)  Long-term corporate bonds
C)  Intermediate-term government bonds
D)  U.S.Treasury bills
E)  Large-company stocksF) C) and E)
G) B) and D)

Question 19

Which one of the following is defined as the average compound return earned per year over a multiyear period?

Accepted Answer

A)  Geometric average return
B)  Variance of returns
C)  Standard deviation of returns
D)  Arithmetic average return
E)  Normal distribution of returnsF) A) and C)
G) A) and E)

Question 20

What is the probability associated with a return that lies in the upper tail when the mean plus two standard deviations is graphed?

Accepted Answer

A)  05 percent
B)  5 percent
C)  1.0 percent
D)  2.5 percent
E)  5.0 percentF) A) and B)
G) B) and D)

Exam 10: Some Lessons From Capital Market History

One year ago,you purchased 600 shares of a stock.This morning you sold those shares and realized a total return of 3.1 percent.Given this information,you know for sure the:

Correct Answer
verified

A security produced returns of 11 percent,7 percent,9 percent,13 percent,and -14 percent over the past five years,respectively.Based on these five years,what is the probability that this stock will earn more than 16.16 percent in any one given year?

Correct Answer
verified

What is the probability associated with a return that lies in the upper tail when the mean plus two standard deviations is graphed?

Correct Answer
verified

Over the past four years,a stock produced returns of 13 percent,-9 percent,8 percent,and 14 percent,respectively.Based on these four years,what range of returns would you expect to see 99 percent of the time?

Correct Answer
verified

Alpha Industries stock had returns of 17 percent,-11 percent,9 percent,and 2 percent for four of the last five years,respectively.The average return of the stock over this period was 8.7 percent.What is the standard deviation of the stock's returns?

Correct Answer
verified

The rate of return on which one of the following has a risk premium of 0%?

Correct Answer
verified

Which one of the following is the hypothesis that securities markets are efficient?

Correct Answer
verified

A stock has produced returns of 11.9 percent,5.6 percent,16.4 percent,and -4.2 percent over the past four years,respectively.What is the geometric average return?

Correct Answer
verified

Correct Answer
verified

Which one of the following is defined as the average compound return earned per year over a multiyear period?

Correct Answer
verified

Which one of the following categories has the widest frequency distribution of returns for the period 1926-2014?

Correct Answer
verified

Over the period of 1926-2014:

Correct Answer
verified

A bond has an average return of 11.2 percent and a standard deviation of 14.6 percent.What range of returns would you expect to see 68 percent of the time on this security?

Correct Answer
verified

The average risk premium on long-term government bonds for the period 1926-2014 was equal to:

Correct Answer
verified

Correct Answer
verified

A stock has produced returns of 19 percent,6 percent,-21 percent,-2 percent,and 14 percent for the past five years,respectively.What is the standard deviation of these returns?

Correct Answer
verified

Assume that long-term corporate bonds had an average return of 6.4 percent and a standard deviation of 2.9 percent for a 50-year period.What range of returns would you expect to see on these bonds 68 percent of the time?

Correct Answer
verified

Which one of the following combinations will always result in an increased dividend yield?

Correct Answer
verified

Over the past four years,a stock produced returns of 6 percent,8 percent,19 percent,and 2 percent,respectively.Based on these four years,what range of returns would you expect to see 95 percent of the time?

Correct Answer
verified

Which one of the following is the most apt to have the largest risk premium in the future based on the historical record for 1926-2014?

Correct Answer
verified

Exam 10: Some Lessons From Capital Market History

One year ago,you purchased 600 shares of a stock.This morning you sold those shares and realized a total return of 3.1 percent.Given this information,you know for sure the:

Correct AnswerverifiedShow Answer

A security produced returns of 11 percent,7 percent,9 percent,13 percent,and -14 percent over the past five years,respectively.Based on these five years,what is the probability that this stock will earn more than 16.16 percent in any one given year?

Correct AnswerverifiedShow Answer

What is the probability associated with a return that lies in the upper tail when the mean plus two standard deviations is graphed?

Correct AnswerverifiedShow Answer

Over the past four years,a stock produced returns of 13 percent,-9 percent,8 percent,and 14 percent,respectively.Based on these four years,what range of returns would you expect to see 99 percent of the time?

Correct AnswerverifiedShow Answer

Alpha Industries stock had returns of 17 percent,-11 percent,9 percent,and 2 percent for four of the last five years,respectively.The average return of the stock over this period was 8.7 percent.What is the standard deviation of the stock's returns?

Correct AnswerverifiedShow Answer

The rate of return on which one of the following has a risk premium of 0%?

Correct AnswerverifiedShow Answer

Which one of the following is the hypothesis that securities markets are efficient?

Correct AnswerverifiedShow Answer

A stock has produced returns of 11.9 percent,5.6 percent,16.4 percent,and -4.2 percent over the past four years,respectively.What is the geometric average return?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following is defined as the average compound return earned per year over a multiyear period?

Correct AnswerverifiedShow Answer

Which one of the following categories has the widest frequency distribution of returns for the period 1926-2014?

Correct AnswerverifiedShow Answer

Over the period of 1926-2014:

Correct AnswerverifiedShow Answer

A bond has an average return of 11.2 percent and a standard deviation of 14.6 percent.What range of returns would you expect to see 68 percent of the time on this security?

Correct AnswerverifiedShow Answer

The average risk premium on long-term government bonds for the period 1926-2014 was equal to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A stock has produced returns of 19 percent,6 percent,-21 percent,-2 percent,and 14 percent for the past five years,respectively.What is the standard deviation of these returns?

Correct AnswerverifiedShow Answer

Assume that long-term corporate bonds had an average return of 6.4 percent and a standard deviation of 2.9 percent for a 50-year period.What range of returns would you expect to see on these bonds 68 percent of the time?

Correct AnswerverifiedShow Answer

Which one of the following combinations will always result in an increased dividend yield?

Correct AnswerverifiedShow Answer

Over the past four years,a stock produced returns of 6 percent,8 percent,19 percent,and 2 percent,respectively.Based on these four years,what range of returns would you expect to see 95 percent of the time?

Correct AnswerverifiedShow Answer

Which one of the following is the most apt to have the largest risk premium in the future based on the historical record for 1926-2014?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified