Question 1

Which one of the following categories of securities had the highest average return for the period 1926-2010?

Accepted Answer

A)   U.S.Treasury bills
B)   large company stocks
C)   small company stocks
D)   long-term corporate bonds
E)   long-term government bondsF) A) and B)
G) A) and C)

Question 2

Shawn earned an average return of 14.6 percent on his investments over the past 20 years while the S&P 500,a measure of the overall market,only returned an average of 13.9 percent.Explain how this can occur if the stock market is efficient.

Accepted Answer

An investor can purchase securities that...

Question 3

The average annual return on small-company stocks was about _____ percent greater than the average annual return on large-company stocks over the period 1926-2010.

Accepted Answer

A)   3
B)   5
C)   7
D)   9
E)   11F) None of the above
G) A) and D)

Question 4

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

Accepted Answer

A)   1929-1933
B)   1957-1961
C)   1978-1981
D)   1992-1996
E)   2001-2005F) A) and E)
G) A) and B)

Question 5

To convince investors to accept greater volatility,you must:

Accepted Answer

A)   decrease the risk premium.
B)   increase the risk premium.
C)   decrease the real return.
D)   decrease the risk-free rate.
E)   increase the risk-free rate.F) All of the above
G) C) and E)

Question 6

A year ago,you purchased 300 shares of Stellar Wood Products,Inc.stock at a price of $8.62 per share.The stock pays an annual dividend of $0.10 per share.Today,you sold all of your shares for $4.80 per share.What is your total dollar return on this investment?

Accepted Answer

A)   -$382
B)   -$1,372
C)   -$1,528
D)   -$1,116
E)   -$1,360F) A) and C)
G) B) and C)

Question 7

Which one of the following categories of securities had the lowest average risk premium for the period 1926-2010?

Accepted Answer

A)   long-term government bonds
B)   small company stocks
C)   large company stocks
D)   long-term corporate bonds
E)   U.S.Treasury billsF) A) and B)
G) None of the above

Question 8

Inside information has the least value when financial markets are:

Accepted Answer

A)   weak form efficient.
B)   semiweak form efficient.
C)   semistrong form efficient.
D)   strong form efficient.
E)   inefficient.F) None of the above
G) C) and D)

Question 9

One year ago,you purchased a stock at a price of $33.49.The stock pays quarterly dividends of $0.20 per share.Today,the stock is selling for $28.20 per share.What is your capital gain on this investment?

Accepted Answer

A)   -$5.49
B)   -$5.29
C)   -$4.76
D)   -$4.16
E)   -$5.09F) A) and D)
G) A) and E)

Question 10

Assume that the market prices of the securities that trade in a particular market fairly reflect the available information related to those securities.Which one of the following terms best defines that market?

Accepted Answer

A)   riskless market
B)   evenly distributed market
C)   zero volatility market
D)   Blume's market
E)   efficient capital marketF) All of the above
G) A) and E)

Question 11

Assume that the returns from an asset are normally distributed.The average annual return for the asset is 18.1 percent and the standard deviation of the returns is 32.5 percent.What is the approximate probability that your money will triple in value in a single year?

Accepted Answer

A)   less than 0.5 percent
B)   less than 1 percent but greater than 0.5 percent
C)   less then 2.5 percent but greater than 1 percent
D)   less than 5 percent but greater than 2.5 percent
E)   less than 10 percent but greater than 5 percentF) C) and D)
G) B) and E)

Question 12

You want to invest in an index fund which directly correlates to the overall U.S.stock market.How can you determine if the market risk premium you are expecting to earn is reasonable for the long-term?

Accepted Answer

You could compare your expectation to th...

Question 13

Which of the following statements related to market efficiency tend to be supported by current evidence?
I.Markets tend to respond quickly to new information.
II.It is difficult for investors to earn abnormal returns.
III.Short-run prices are difficult to predict accurately based on public information.
IV.Markets are most likely weak form efficient.

Accepted Answer

A)   I and III only
B)   II and IV only
C)   I and IV only
D)   I,III,and IV only
E)   I,II,and III onlyF) A) and D)
G) A) and C)

Question 14

One year ago,you purchased 150 shares of a stock at a price of $54.18 a share.Today,you sold those shares for $40.25 a share.During the past year,you received total dividends of $182 while inflation averaged 4.2 percent.What is your approximate real rate of return on this investment?

Accepted Answer

A)   -24.20 percent
B)   -27.67 percent
C)   -20.00 percent
D)   20.00 percent
E)   24.20 percentF) A) and B)
G) C) and E)

Question 15

What was the highest annual rate of inflation during the period 1926-2010?

Accepted Answer

A)   between 0 and 3 percent
B)   between 3 and 5 percent
C)   between 5 and 10 percent
D)   between 10 and 15 percent
E)   between 15 and 20 percentF) D) and E)
G) A) and E)

Question 16

A stock had annual returns of 3.6 percent,-8.7 percent,5.6 percent,and 12.5 percent over the past four years.Which one of the following best describes the probability that this stock will produce a return of 22 percent or more in a single year?

Accepted Answer

A)   less than 0.1 percent
B)   less than 0.5 percent but greater than 0.1 percent
C)   less than 1.0 percent but greater the 0.5 percent
D)   less than 2.5 percent but greater than 0.5 percent
E)   less than 5 percent but greater than 2.5 percentF) C) and D)
G) None of the above

Question 17

A stock had returns of 12 percent,16 percent,10 percent,19 percent,15 percent,and -6 percent over the last six years.What is the geometric average return on the stock for this period?

Accepted Answer

A)   10.90 percent
B)   10.68 percent
C)   13.56 percent
D)   14.76 percent
E)   15.01 percentF) B) and C)
G) A) and C)

Question 18

-Suppose a stock had an initial price of $80 per share,paid a dividend of $1.35 per share during the year,and had an ending share price of $87.What was the capital gains yield?

Accepted Answer

A)   1.55 percent
B)   1.69 percent
C)   8.05 percent
D)   8.75 percent
E)   10.44 percentF) A) and D)
G) A) and B)

Exam 12: Some Lessons From Capital Market History

A stock had returns of 12 percent,16 percent,10 percent,19 percent,15 percent,and -6 percent over the last six years.What is the geometric average return on the stock for this period?

Correct Answer
verified

Shawn earned an average return of 14.6 percent on his investments over the past 20 years while the S&P 500,a measure of the overall market,only returned an average of 13.9 percent.Explain how this can occur if the stock market is efficient.

Correct Answer
verified
An investor can purchase securities that...
View Answer

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

Correct Answer
verified

Which one of the following categories of securities had the highest average return for the period 1926-2010?

Correct Answer
verified

One year ago,you purchased 150 shares of a stock at a price of $54.18 a share.Today,you sold those shares for $40.25 a share.During the past year,you received total dividends of $182 while inflation averaged 4.2 percent.What is your approximate real rate of return on this investment?

Correct Answer
verified

A year ago,you purchased 300 shares of Stellar Wood Products,Inc.stock at a price of $8.62 per share.The stock pays an annual dividend of $0.10 per share.Today,you sold all of your shares for $4.80 per share.What is your total dollar return on this investment?

Correct Answer
verified

Correct Answer
verified

Which one of the following categories of securities had the lowest average risk premium for the period 1926-2010?

Correct Answer
verified

You want to invest in an index fund which directly correlates to the overall U.S.stock market.How can you determine if the market risk premium you are expecting to earn is reasonable for the long-term?

Correct Answer
verified
You could compare your expectation to th...
View Answer

Assume that the returns from an asset are normally distributed.The average annual return for the asset is 18.1 percent and the standard deviation of the returns is 32.5 percent.What is the approximate probability that your money will triple in value in a single year?

Correct Answer
verified

What was the highest annual rate of inflation during the period 1926-2010?

Correct Answer
verified

A stock had annual returns of 3.6 percent,-8.7 percent,5.6 percent,and 12.5 percent over the past four years.Which one of the following best describes the probability that this stock will produce a return of 22 percent or more in a single year?

Correct Answer
verified

-Suppose a stock had an initial price of $80 per share,paid a dividend of $1.35 per share during the year,and had an ending share price of $87.What was the capital gains yield?

Correct Answer
verified

One year ago,you purchased a stock at a price of $33.49.The stock pays quarterly dividends of $0.20 per share.Today,the stock is selling for $28.20 per share.What is your capital gain on this investment?

Correct Answer
verified

To convince investors to accept greater volatility,you must:

Correct Answer
verified

The average annual return on small-company stocks was about _____ percent greater than the average annual return on large-company stocks over the period 1926-2010.

Correct Answer
verified

Assume that the market prices of the securities that trade in a particular market fairly reflect the available information related to those securities.Which one of the following terms best defines that market?

Correct Answer
verified

Inside information has the least value when financial markets are:

Correct Answer
verified

Exam 12: Some Lessons From Capital Market History

A stock had returns of 12 percent,16 percent,10 percent,19 percent,15 percent,and -6 percent over the last six years.What is the geometric average return on the stock for this period?

Correct AnswerverifiedShow Answer

Shawn earned an average return of 14.6 percent on his investments over the past 20 years while the S&P 500,a measure of the overall market,only returned an average of 13.9 percent.Explain how this can occur if the stock market is efficient.

Correct AnswerverifiedAn investor can purchase securities that...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Which one of the following categories of securities had the highest average return for the period 1926-2010?

Correct AnswerverifiedShow Answer

One year ago,you purchased 150 shares of a stock at a price of $54.18 a share.Today,you sold those shares for $40.25 a share.During the past year,you received total dividends of $182 while inflation averaged 4.2 percent.What is your approximate real rate of return on this investment?

Correct AnswerverifiedShow Answer

A year ago,you purchased 300 shares of Stellar Wood Products,Inc.stock at a price of $8.62 per share.The stock pays an annual dividend of $0.10 per share.Today,you sold all of your shares for $4.80 per share.What is your total dollar return on this investment?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following categories of securities had the lowest average risk premium for the period 1926-2010?

Correct AnswerverifiedShow Answer

You want to invest in an index fund which directly correlates to the overall U.S.stock market.How can you determine if the market risk premium you are expecting to earn is reasonable for the long-term?

Correct AnswerverifiedYou could compare your expectation to th...View AnswerShow Answer

Assume that the returns from an asset are normally distributed.The average annual return for the asset is 18.1 percent and the standard deviation of the returns is 32.5 percent.What is the approximate probability that your money will triple in value in a single year?

Correct AnswerverifiedShow Answer

What was the highest annual rate of inflation during the period 1926-2010?

Correct AnswerverifiedShow Answer

A stock had annual returns of 3.6 percent,-8.7 percent,5.6 percent,and 12.5 percent over the past four years.Which one of the following best describes the probability that this stock will produce a return of 22 percent or more in a single year?

Correct AnswerverifiedShow Answer

-Suppose a stock had an initial price of $80 per share,paid a dividend of $1.35 per share during the year,and had an ending share price of $87.What was the capital gains yield?

Correct AnswerverifiedShow Answer

One year ago,you purchased a stock at a price of $33.49.The stock pays quarterly dividends of $0.20 per share.Today,the stock is selling for $28.20 per share.What is your capital gain on this investment?

Correct AnswerverifiedShow Answer

To convince investors to accept greater volatility,you must:

Correct AnswerverifiedShow Answer

The average annual return on small-company stocks was about _____ percent greater than the average annual return on large-company stocks over the period 1926-2010.

Correct AnswerverifiedShow Answer

Assume that the market prices of the securities that trade in a particular market fairly reflect the available information related to those securities.Which one of the following terms best defines that market?

Correct AnswerverifiedShow Answer

Inside information has the least value when financial markets are:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
An investor can purchase securities that...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified
You could compare your expectation to th...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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