Question 1

Which one of the following statements related to capital gains is correct?

Accepted Answer

A)   The capital gains yield includes only realized capital gains.
B)   An increase in an unrealized capital gain will increase the capital gains yield.
C)   The capital gains yield must be either positive or zero.
D)   The capital gains yield is expressed as a percentage of a security's total return.
E)   The capital gains yield represents the total return earned by an investor.F) A) and E)
G) C) and E)

Question 2

Evidence seems to support the view that studying public information to identify mispriced stocks is:

Accepted Answer

A)   effective as long as the market is only semistrong form efficient.
B)   effective provided the market is only weak form efficient.
C)   ineffective.
D)   effective only in strong form efficient markets.
E)   ineffective only in strong form efficient markets.F) C) and E)
G) C) and D)

Question 3

West Wind Tours stock is currently selling for $52.30 a share. The stock has a dividend yield of 2.48 percent. How much dividend income will you receive per year if you purchase 600 shares of this stock?

Accepted Answer

A)   $824.96
B)   $836.20
C)   $724.80
D)   $762.00
E)   $778.22F) D) and E)
G) All of the above

Question 4

The primary purpose of Blume's formula is to:

Accepted Answer

A)   compute an accurate historical rate of return.
B)   determine a stock's true current value.
C)   consider compounding when estimating a rate of return.
D)   determine the actual real rate of return.
E)   project future rates of return.F) C) and D)
G) A) and D)

Question 5

If the variability of the returns on large-company stocks were to decrease over the long-term, you would expect which one of the following as related to large-company stocks to occur as a result?

Accepted Answer

A)   Increase in the risk premium
B)   Increase in the average long-term rate of return
C)   Decrease in the 68 percent probability range of returns
D)   Increase in the standard deviation
E)   Increase in the geometric average rate of returnF) B) and E)
G) C) and D)

Question 6

The common stock of Air Express had annual returns of 11.7 percent, 8.8 percent, 16.7 percent, and −7.9 percent over the last four years, respectively. What is the standard deviation of these returns?

Accepted Answer

A)   8.29 percent
B)   9.14 percent
C)   11.54 percent
D)   7.78 percent
E)   10.66 percentF) A) and E)
G) All of the above

Question 7

Which one of the following time periods is associated with low rates of inflation?

Accepted Answer

A)   1941-1942
B)   1973-1974
C)   2014-2015
D)   1979-1980
E)   1946-1947F) A) and D)
G) A) and C)

Question 8

Which one of the following categories of securities had the most volatile annual returns over the period 1926-2016?

Accepted Answer

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

Question 9

One year ago, you purchased 100 shares of Best Wings stock at a price of $38.19 a share. The company pays an annual dividend of $.46 per share. Today, you sold for the shares for $37.92 a share. What is your total percentage return on this investment?

Accepted Answer

A)   2.62 percent
B)   1.93 percent
C)   2.72 percent
D)   1.08 percent
E)   .50 percentF) A) and E)
G) A) and B)

Question 10

A stock had returns of 13 percent, 11 percent, 8 percent, 14 percent, −9 percent, and −5 percent over the past six years. What is the geometric average return for this time period?

Accepted Answer

A)   4.93 percent
B)   4.67 percent
C)   5.13 percent
D)   5.39 percent
E)   5.26 percentF) B) and C)
G) A) and B)

Question 11

Over the past five years, a stock produced returns of 11 percent, 14 percent, 4 percent, −9 percent, and 5 percent. What is the probability that an investor in this stock will not lose more than 10 percent in any one given year?

Accepted Answer

A)   Greater than .5 but less than 1.0 percent
B)   Greater than 1 percent but less than 2.5 percent
C)   Greater than 2.5 percent but less than 16 percent
D)   Greater than 84 percent but less than 97.5 percent
E)   Greater than 95 percentF) A) and C)
G) All of the above

Question 12

You are aware that your neighbor trades stocks based on confidential information he overhears at his workplace. This information is not available to the general public. This neighbor continually brags to you about the profits he earns on these trades. Given this, you would tend to argue that the financial markets are at best ________ form efficient.

Accepted Answer

A)   weak
B)   semiweak
C)   semistrong
D)   strong
E)   perfectF) A) and D)
G) B) and C)

Question 13

Last year, you purchased 400 shares of Analog stock for $12.92 a share. You have received a total of $136 in dividends and $4,301 in proceeds from selling the shares. What is your capital gains yield on this stock?

Accepted Answer

A)   9.09 percent
B)   6.73 percent
C)   −16.78 percent
D)   −14.14 percent
E)   −11.02 percentF) A) and D)
G) A) and B)

Exam 12: Some Lessons from Capital Market History

Correct Answer
verified

One year ago, you purchased 100 shares of Best Wings stock at a price of $38.19 a share. The company pays an annual dividend of $.46 per share. Today, you sold for the shares for $37.92 a share. What is your total percentage return on this investment?

Correct Answer
verified

Which one of the following categories of securities had the most volatile annual returns over the period 1926-2016?

Correct Answer
verified

West Wind Tours stock is currently selling for $52.30 a share. The stock has a dividend yield of 2.48 percent. How much dividend income will you receive per year if you purchase 600 shares of this stock?

Correct Answer
verified

The primary purpose of Blume's formula is to:

Correct Answer
verified

Over the past five years, a stock produced returns of 11 percent, 14 percent, 4 percent, −9 percent, and 5 percent. What is the probability that an investor in this stock will not lose more than 10 percent in any one given year?

Correct Answer
verified

Which one of the following time periods is associated with low rates of inflation?

Correct Answer
verified

If the variability of the returns on large-company stocks were to decrease over the long-term, you would expect which one of the following as related to large-company stocks to occur as a result?

Correct Answer
verified

The common stock of Air Express had annual returns of 11.7 percent, 8.8 percent, 16.7 percent, and −7.9 percent over the last four years, respectively. What is the standard deviation of these returns?

Correct Answer
verified

Which one of the following statements related to capital gains is correct?

Correct Answer
verified

A stock had returns of 13 percent, 11 percent, 8 percent, 14 percent, −9 percent, and −5 percent over the past six years. What is the geometric average return for this time period?

Correct Answer
verified

Last year, you purchased 400 shares of Analog stock for $12.92 a share. You have received a total of $136 in dividends and $4,301 in proceeds from selling the shares. What is your capital gains yield on this stock?

Correct Answer
verified

Evidence seems to support the view that studying public information to identify mispriced stocks is:

Correct Answer
verified

Exam 12: Some Lessons from Capital Market History

Correct AnswerverifiedShow Answer

One year ago, you purchased 100 shares of Best Wings stock at a price of $38.19 a share. The company pays an annual dividend of $.46 per share. Today, you sold for the shares for $37.92 a share. What is your total percentage return on this investment?

Correct AnswerverifiedShow Answer

Which one of the following categories of securities had the most volatile annual returns over the period 1926-2016?

Correct AnswerverifiedShow Answer

West Wind Tours stock is currently selling for $52.30 a share. The stock has a dividend yield of 2.48 percent. How much dividend income will you receive per year if you purchase 600 shares of this stock?

Correct AnswerverifiedShow Answer

The primary purpose of Blume's formula is to:

Correct AnswerverifiedShow Answer

Over the past five years, a stock produced returns of 11 percent, 14 percent, 4 percent, −9 percent, and 5 percent. What is the probability that an investor in this stock will not lose more than 10 percent in any one given year?

Correct AnswerverifiedShow Answer

Which one of the following time periods is associated with low rates of inflation?

Correct AnswerverifiedShow Answer

If the variability of the returns on large-company stocks were to decrease over the long-term, you would expect which one of the following as related to large-company stocks to occur as a result?

Correct AnswerverifiedShow Answer

The common stock of Air Express had annual returns of 11.7 percent, 8.8 percent, 16.7 percent, and −7.9 percent over the last four years, respectively. What is the standard deviation of these returns?

Correct AnswerverifiedShow Answer

Which one of the following statements related to capital gains is correct?

Correct AnswerverifiedShow Answer

A stock had returns of 13 percent, 11 percent, 8 percent, 14 percent, −9 percent, and −5 percent over the past six years. What is the geometric average return for this time period?

Correct AnswerverifiedShow Answer

Last year, you purchased 400 shares of Analog stock for $12.92 a share. You have received a total of $136 in dividends and $4,301 in proceeds from selling the shares. What is your capital gains yield on this stock?

Correct AnswerverifiedShow Answer

Evidence seems to support the view that studying public information to identify mispriced stocks is:

Correct AnswerverifiedShow Answer

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