Question 1

You just sold 600 shares of Wesley,Inc.stock at a price of $32.04 a share.Last year,you paid $30.92 a share to buy this stock.Over the course of the year,you received dividends totaling $1.20 per share.What is your total capital gain on this investment?

Accepted Answer

A)   -$618
B)   -$672
C)   $672
D)   $618
E)   $720F) A) and D)
G) A) and C)

Question 2

One year ago,you purchased 500 shares of Best Wings,Inc.stock at a price of $9.75 a share.The company pays an annual dividend of $0.10 per share.Today,you sold all of your shares for $15.60 a share.What is your total percentage return on this investment?

Accepted Answer

A)   38.46 percent
B)   39.10 percent
C)   39.72 percent
D)   62.50 percent
E)   61.03 percentF) A) and D)
G) A) and E)

Question 3

-Define and explain the three forms of market efficiency.

Accepted Answer

The current stock pr...

Question 4

The historical record for the period 1926-2010 supports which one of the following statements?

Accepted Answer

A)   A higher-risk security will provide a higher rate of return next year than will a lower-risk security.
B)   If you need a stated amount of money next year,your best investment option today for those funds would be long-term government bonds.
C)   Increased long-run potential returns are obtained by lowering risks.
D)   It is possible for small-company stocks to more than double in value in any one given year.
E)   Inflation was positive each year throughout the period of 1926-2010.F) A) and B)
G) C) and E)

Question 5

A stock had returns of 14 percent,13 percent,-10 percent,and 7 percent for the past four years.Which one of the following best describes the probability that this stock will lose no more than 10 percent in any one year?

Accepted Answer

A)   greater than 0.5 but less than 1.0 percent
B)   greater than 1.0 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) B) and C)
G) A) and E)

Question 6

The common stock of Air United,Inc. ,had annual returns of 15.6 percent,2.4 percent,-11.8 percent,and 32.9 percent over the last four years,respectively.What is the standard deviation of these returns?

Accepted Answer

A)   13.29 percent
B)   14.14 percent
C)   16.50 percent
D)   17.78 percent
E)   19.05 percentF) A) and B)
G) B) and E)

Question 7

You bought one of Great White Shark Repellant Co.'s 10 percent coupon bonds one year ago for $815.These bonds pay annual payments,have a face value of $1,000,and mature 14 years from now.Suppose you decide to sell your bonds today when the required return on the bonds is 14 percent.The inflation rate over the past year was 3.7 percent.What was your total real return on this investment?

Accepted Answer

A)   2.97 percent
B)   1.75 percent
C)   1.18 percent
D)   3.44 percent
E)   2.58 percentF) D) and E)
G) C) and E)

Question 8

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 equal to zero.
D)   The capital gains yield is expressed as a percentage of the sales price.
E)   The capital gains yield represents the total return earned by an investor.F) B) and E)
G) B) and D)

Question 9

Estimates of the rate of return on a security based on a historical arithmetic average will probably tend to _____ the expected return for the long-term and estimates using the historical geometric average will probably tend to _____ the expected return for the short-term.

Accepted Answer

A)   overestimate;overestimate
B)   overestimate;underestimate
C)   underestimate;overestimate
D)   underestimate;underestimate
E)   accurately;accuratelyF) None of the above
G) C) and D)

Question 10

A stock has returns of 18 percent,15 percent,-21 percent,and 6 percent for the past four years.Based on this information,what is the 95 percent probability range of returns for any one given year?

Accepted Answer

A)   -13.56 to 20.56 percent
B)   -24.60 to 31.80 percent
C)   -31.00 to 40.00 percent
D)   -47.68 to 54.68 percent
E)   -71.73 to 71.73 percentF) All of the above
G) C) and D)

Question 11

Last year,you purchased 500 shares of Analog Devices,Inc.stock for $11.16 a share.You have received a total of $120 in dividends and $7,190 from selling the shares.What is your capital gains yield on this stock?

Accepted Answer

A)   26.70 percent
B)   26.73 percent
C)   28.85 percent
D)   29.13 percent
E)   31.02 percentF) A) and E)
G) A) and D)

Question 12

Which one of the following best defines the variance of an investment's annual returns over a number of years?

Accepted Answer

A)   The average squared difference between the arithmetic and the geometric average annual returns.
B)   The squared summation of the differences between the actual returns and the average geometric return.
C)   The average difference between the annual returns and the average return for the period.
D)   The difference between the arithmetic average and the geometric average return for the period.
E)   The average squared difference between the actual returns and the arithmetic average return.F) B) and E)
G) C) and D)

Question 13

Stacy purchased a stock last year and sold it today for $3 a share more than her purchase price.She received a total of $0.75 in dividends.Which one of the following statements is correct in relation to this investment?

Accepted Answer

A)   The dividend yield is expressed as a percentage of the selling price.
B)   The capital gain would have been less had Stacy not received the dividends.
C)   The total dollar return per share is $3.
D)   The capital gains yield is positive.
E)   The dividend yield is greater than the capital gains yield.F) A) and D)
G) C) and E)

Question 14

According to theory,studying historical stock price movements to identify mispriced stocks:

Accepted Answer

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

Question 15

Which one of the following statements best defines the efficient market hypothesis?

Accepted Answer

A)   Efficient markets limit competition.
B)   Security prices in efficient markets remain steady as new information becomes available.
C)   Mispriced securities are common in efficient markets.
D)   All securities in an efficient market are zero net present value investments.
E)   Profits are removed as a market incentive when markets become efficient.F) A) and D)
G) A) and B)

Question 16

Which one of the following was the least volatile over the period of 1926-2010?

Accepted Answer

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

Question 17

If you excel in analyzing the future outlook of firms,you would prefer the financial markets be ____ form efficient so that you can have an advantage in the marketplace.

Accepted Answer

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

Question 18

A stock has annual returns of 5 percent,21 percent,-12 percent,7 percent,and -6 percent for the past five years.The arithmetic average of these returns is _____ percent while the geometric average return for the period is _____ percent.

Accepted Answer

A)   3.89;3.62
B)   3.89;4.60
C)   3.62;3.89
D)   4.60;3.62
E)   4.60;3.89F) B) and D)
G) C) and E)

Question 19

-You find a certain stock that had returns of 4 percent,-5 percent,-15 percent,and 16 percent for four of the last five years.The average return of the stock for the 5-year period was 13 percent.What is the standard deviation of the stock's returns for the five-year period?

Accepted Answer

A)   21.39 percent
B)   24.98 percent
C)   27.16 percent
D)   31.23 percent
E)   34.02 percentF) A) and E)
G) C) and D)

Question 20

According to Jeremy Siegel,the real return on stocks over the long-term has averaged about:

Accepted Answer

A)   6.7 percent
B)   8.7 percent
C)   10.4 percent
D)   12.3 percent
E)   14.8 percentF) D) and E)
G) C) and E)

Exam 12: Some Lessons From Capital Market History

Which one of the following statements best defines the efficient market hypothesis?

Correct Answer
verified

-Define and explain the three forms of market efficiency.

Correct Answer
verified
The current stock pr...
View Answer

Stacy purchased a stock last year and sold it today for $3 a share more than her purchase price.She received a total of $0.75 in dividends.Which one of the following statements is correct in relation to this investment?

Correct Answer
verified

Which one of the following best defines the variance of an investment's annual returns over a number of years?

Correct Answer
verified

Estimates of the rate of return on a security based on a historical arithmetic average will probably tend to _ the expected return for the long-term and estimates using the historical geometric average will probably tend to _ the expected return for the short-term.

Correct Answer
verified

Correct Answer
verified

One year ago,you purchased 500 shares of Best Wings,Inc.stock at a price of $9.75 a share.The company pays an annual dividend of $0.10 per share.Today,you sold all of your shares for $15.60 a share.What is your total percentage return on this investment?

Correct Answer
verified

A stock has annual returns of 5 percent,21 percent,-12 percent,7 percent,and -6 percent for the past five years.The arithmetic average of these returns is _ percent while the geometric average return for the period is _ percent.

Correct Answer
verified

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

Correct Answer
verified

The common stock of Air United,Inc. ,had annual returns of 15.6 percent,2.4 percent,-11.8 percent,and 32.9 percent over the last four years,respectively.What is the standard deviation of these returns?

Correct Answer
verified

A stock had returns of 14 percent,13 percent,-10 percent,and 7 percent for the past four years.Which one of the following best describes the probability that this stock will lose no more than 10 percent in any one year?

Correct Answer
verified

A stock has returns of 18 percent,15 percent,-21 percent,and 6 percent for the past four years.Based on this information,what is the 95 percent probability range of returns for any one given year?

Correct Answer
verified

According to theory,studying historical stock price movements to identify mispriced stocks:

Correct Answer
verified

Which one of the following was the least volatile over the period of 1926-2010?

Correct Answer
verified

The historical record for the period 1926-2010 supports which one of the following statements?

Correct Answer
verified

According to Jeremy Siegel,the real return on stocks over the long-term has averaged about:

Correct Answer
verified

If you excel in analyzing the future outlook of firms,you would prefer the financial markets be ____ form efficient so that you can have an advantage in the marketplace.

Correct Answer
verified

Last year,you purchased 500 shares of Analog Devices,Inc.stock for $11.16 a share.You have received a total of $120 in dividends and $7,190 from selling the shares.What is your capital gains yield on this stock?

Correct Answer
verified

-You find a certain stock that had returns of 4 percent,-5 percent,-15 percent,and 16 percent for four of the last five years.The average return of the stock for the 5-year period was 13 percent.What is the standard deviation of the stock's returns for the five-year period?

Correct Answer
verified

You just sold 600 shares of Wesley,Inc.stock at a price of $32.04 a share.Last year,you paid $30.92 a share to buy this stock.Over the course of the year,you received dividends totaling $1.20 per share.What is your total capital gain on this investment?

Correct Answer
verified

Exam 12: Some Lessons From Capital Market History

Which one of the following statements best defines the efficient market hypothesis?

Correct AnswerverifiedShow Answer

-Define and explain the three forms of market efficiency.

Correct AnswerverifiedThe current stock pr...View AnswerShow Answer

Stacy purchased a stock last year and sold it today for $3 a share more than her purchase price.She received a total of $0.75 in dividends.Which one of the following statements is correct in relation to this investment?

Correct AnswerverifiedShow Answer

Which one of the following best defines the variance of an investment's annual returns over a number of years?

Correct AnswerverifiedShow Answer

Estimates of the rate of return on a security based on a historical arithmetic average will probably tend to _____ the expected return for the long-term and estimates using the historical geometric average will probably tend to _____ the expected return for the short-term.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

One year ago,you purchased 500 shares of Best Wings,Inc.stock at a price of $9.75 a share.The company pays an annual dividend of $0.10 per share.Today,you sold all of your shares for $15.60 a share.What is your total percentage return on this investment?

Correct AnswerverifiedShow Answer

A stock has annual returns of 5 percent,21 percent,-12 percent,7 percent,and -6 percent for the past five years.The arithmetic average of these returns is _____ percent while the geometric average return for the period is _____ percent.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The common stock of Air United,Inc. ,had annual returns of 15.6 percent,2.4 percent,-11.8 percent,and 32.9 percent over the last four years,respectively.What is the standard deviation of these returns?

Correct AnswerverifiedShow Answer

A stock had returns of 14 percent,13 percent,-10 percent,and 7 percent for the past four years.Which one of the following best describes the probability that this stock will lose no more than 10 percent in any one year?

Correct AnswerverifiedShow Answer

A stock has returns of 18 percent,15 percent,-21 percent,and 6 percent for the past four years.Based on this information,what is the 95 percent probability range of returns for any one given year?

Correct AnswerverifiedShow Answer

According to theory,studying historical stock price movements to identify mispriced stocks:

Correct AnswerverifiedShow Answer

Which one of the following was the least volatile over the period of 1926-2010?

Correct AnswerverifiedShow Answer

The historical record for the period 1926-2010 supports which one of the following statements?

Correct AnswerverifiedShow Answer

According to Jeremy Siegel,the real return on stocks over the long-term has averaged about:

Correct AnswerverifiedShow Answer

If you excel in analyzing the future outlook of firms,you would prefer the financial markets be ____ form efficient so that you can have an advantage in the marketplace.

Correct AnswerverifiedShow Answer

Last year,you purchased 500 shares of Analog Devices,Inc.stock for $11.16 a share.You have received a total of $120 in dividends and $7,190 from selling the shares.What is your capital gains yield on this stock?

Correct AnswerverifiedShow Answer

-You find a certain stock that had returns of 4 percent,-5 percent,-15 percent,and 16 percent for four of the last five years.The average return of the stock for the 5-year period was 13 percent.What is the standard deviation of the stock's returns for the five-year period?

Correct AnswerverifiedShow Answer

You just sold 600 shares of Wesley,Inc.stock at a price of $32.04 a share.Last year,you paid $30.92 a share to buy this stock.Over the course of the year,you received dividends totaling $1.20 per share.What is your total capital gain on this investment?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
The current stock pr...
View Answer

Correct Answer
verified

Correct Answer
verified

Estimates of the rate of return on a security based on a historical arithmetic average will probably tend to _ the expected return for the long-term and estimates using the historical geometric average will probably tend to _ the expected return for the short-term.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A stock has annual returns of 5 percent,21 percent,-12 percent,7 percent,and -6 percent for the past five years.The arithmetic average of these returns is _ percent while the geometric average return for the period is _ percent.

Correct Answer
verified

Correct Answer
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Correct Answer
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