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Exam 1: A Brief History of Risk and Return

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Question 21

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Ellen just sold a stock and realized a 5.8 percent return for a 5-month holding period.What was her annualized rate of return?

A) 11.98 percent
B) 14.49 percent
C) 19.78 percent
D) 21.29 percent
E) 27.20 percent

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Question 22

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Over the past four years,a stock produced returns of 13,6,-5,and 18 percent,respectively.What is the standard deviation of these returns?

A) 8.63 percent
B) 9.93 percent
C) 9.97 percent
D) 10.11 percent
E) 10.15 percent

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Question 23

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Blume's formula is used to:

Which one of the following should be used as the mean return when you are defining the normal distribution of an investment's annual rates of return?

John began his investing program with a $5,500 initial investment.The table below recaps his returns each year as well as the amounts he added to his investment account.What is his dollar-weighted average return?

John began his investing program with a $5,500 initial investment.The table below recaps his returns each year as well as the amounts he added to his investment account.What is his dollar-weighted average return?

Louis owns a stock that has an average geometric return of 10.50 percent and an average arithmetic return of 11.00 percent over the past six years.What average annual rate of return should Louis expect to earn over the next four years?

Over the past five years,an investment produced annual returns of 16.5,21,-18,4,and 17 percent,respectively.What is the geometric average return?

A stock has an average historical risk premium of 5.6 percent.The expected risk-free rate for next year is 2.4 percent.What is the expected rate of return on this stock for next year?

Last year,ABC stock returned 11.43 percent,the risk-free rate was 3.0 percent,and the inflation rate was 2.5 percent.What was the risk premium on ABC stock?

Leeanne owns a stock that has an average geometric return of 12.30 percent and an average arithmetic return of 12.55 percent over the past six years.What average annual rate of return should Leeanne expect to earn over the next four years?

The average risk premium on large-company stocks for the period 1926-2015 was:

Over the past ten years,large-company stocks have returned an average of 9.8 percent annually,long-term corporate bonds have earned 4.6 percent,and U.S.Treasury bills have returned 3.0 percent.How much additional risk premium would you have earned if you had invested in large-company stocks rather than long-term corporate bonds over those ten years?

Over the past four years,Jellystone Quarry stock produced returns of 12.5,15.1,8.7,and 2.6 percent,respectively.For the same time period,the risk-free rate 4.7,5.3,3.9,and 3.4 percent,respectively.What is the arithmetic average risk premium on this stock during these four years?

Celsius stock had year end prices of $42,$37,$44,and $46 over the past four years,respectively.What is the arithmetic average rate of return?

Over the past four years,Hi-Tech Development stock returned 35.2,38.8,18.4,and -32.2 percent annually.What is the arithmetic average return?

Which one of the following statements is correct based on the historical returns for the period 1926-2016?

A stock has an average arithmetic return of 10.55 percent and an average geometric return of 10.41 percent based on the annual returns for the last 15 years.What is projected average annual return on this stock for the next 10 years?

Jeremy owns a stock that has historically returned 7.5 percent annually with a standard deviation of 10.2 percent.There is only a 0.5 percent chance that the stock will produce a return greater than ________ percent in any one year.

The capital gains yield is equal to: