1. Which one of the following categories of securities had the highest average return for the period 1926–2013?
A. Long-term government bonds
B. Small-company stocks
C. Long-term corporate bonds
D. Large-company stocks
2. A stock has a beta of 1.2 and an expected return of 17 percent. A risk-free asset currently earns 5.1 percent. The beta of a portfolio comprised of these two assets is 0.85. What percentage of the portfolio is invested in the stock?
A. 92 percent
B. 77 percent
C. 71 percent
D. 81 percent
3. _______ market efficiency suggests that at a minimum, the current price of the stock reflects the stock’s own past prices.
A. Weak form
B. Strong form
D. Loose form
4. Six months ago, you purchased 100 shares of stock in Global Trading at a price of $38.70 a share. The stock pays a quarterly dividend of $.15 a share. Today, you sold all of your shares for $40.10 per share. What’s the total amount of your dividend income on this investment?
5. Assume all stock prices fairly reflect all of the available information on those stocks. Which one of the following terms best defines the stock market under these conditions?
A. Evenly distributed market
B. Blume’s market
C. Efficient capital market
D. Zero volatility market
6. Suppose that you purchased 300 shares of a stock at $36 per share, ignoring all commissions. Assume the stock paid a dividend of $2.15 per share for the year. The stock price rose to $41.05 per share and was then sold at that price. What was the dividends yield? (Round your answer to the nearest tenth of a percent.)
A. 5.2 percent
B. 6 percent
C. 5 percent
D. 6.5 percent
7. Aimee is the owner of a stock with annual returns of 27 percent, –32 percent, 11 percent, and 23 percent for the last four years, respectively. She thinks the stock may be able to achieve a return of 50 percent or more in a single year. What’s the probability that your friend is correct?
A. Greater than 1 percent but less than 2.5 percent
B. Greater than 16 percent
C. Greater than .5 percent but less than 1 percent
D. Greater than 2.5 percent but less than 16 percent
8. Eliminating unsystematic risk by holding a portfolio of different assets reflects
A. the elimination of systematic risk.
B. beta coefficiency.
C. the principle of diversification.
D. portfolio variance spreading.
9. West Wind Tours stock is currently selling for $48 a share. The stock has a dividend yield of 3.2 percent. How much dividend income will you receive per year if you purchase 200 shares of this stock?
10. Systematic risk is measured by the
B. arithmetic average.
D. geometric average.
11. The market risk premium—the concept that investors should be rewarded for taking on extra risk—is illustrated as the
A. slope of the SML.
B. y-access intersection of the SML.
C. x-access intersection of the SML.
D. peak of the SML.
12. One year ago, you purchased a stock at a price of $32.15. The stock pays quarterly dividends of $.20 per share. Today, the stock is selling for $33.09 per share. What’s your capital gain on this investment?
13. With regard to the efficient markets hypothesis (EMH), which of the following answers illustrates market inefficiencies?
A. Delayed reactions, overreactions, and corrections
B. Insider trading, corruption, and government bailouts
C. An immediate price fall after bad news is announced
D. An immediate price jump after good news is announced
14. The reward-to-risk ratio for stock A is less than the reward-to-risk ratio of stock B. Stock A has a beta of 0.82 and stock B has a beta of 1.29. This information implies that
A. stock A is riskier than stock B, and both stocks are fairly priced.
B. either stock A is overpriced, stock B is underpriced, or both.
C. either stock A is underpriced, stock B is overpriced, or both.
D. stock A is less risky than stock B, and both stocks are fairly priced.
15. Suppose you estimate a boom will occur only 45 percent of the time and that the expected return on the portfolio in such an environment is 40 percent. You also estimate that a recession will occur 55 percent of the time and that the expected return in such an environment is 5 percent. What’s the expected return of the portfolio?
A. 20.75 percent
B. 5 percent
C. 40 percent
D. 22.5 percent
16. How can the expected return of a portfolio be calculated?
A. Take a weighted average by taking the expected return of each asset and multiplying by their proportion in the portfolio. Add the results.
B. Square the expected returns before multiplying by the portfolio weights. Add each of the results, and then take the square root of the sum.
C. If the portfolio has two assets, multiply the expected returns by 50 percent, and then add the results. If the portfolio has three assets, multiply the expected returns by 1/3, and so on. Then multiply the result. The proportions of each asset do not affect the answer.
D. Expected return can be calculated only with Excel.
17. How do you calculate risk premium?
A. The risk-free rate minus the expected return
B. Expected return plus the risk-free rate
C. Expected return divided by the risk-free rate
D. Expected return minus the risk-free rate
18. The common stock of United Industries has a beta of 1.34 and an expected return of 14.29 percent. The risk-free rate of return is 3.7 percent. What’s the expected market risk premium?
A. 7.90 percent
B. 7.02 percent
C. 11.22 percent
D. 10.63 percent
19. The term “unsystematic risk” is synonymous with which of the following?
A. Undiversifiable risk
B. Systematic risk
C. Beta risk
D. Diversifiable risk
20. The intercept point of the security market line is the rate of return that corresponds to
A. a return of zero.
B. the market rate.
C. the risk-free rate.
D. the market risk premium.
Try it now!
How it works?
Follow these simple steps to get your paper done
Place your order
Fill in the order form and provide all details of your assignment.
Proceed with the payment
Choose the payment system that suits you most.
Receive the final file
Once your paper is ready, we will email it to you.
Assignment Help has assembled a team of highly skilled writers with diverse experience in the online writing circles. Our aim is to become a one stop shop for all your Academic/ online writing. Check out below our amazing service!
At Assignment Help, we prioritize on all aspects that creates a good grade such as impeccable grammar, proper structure, zero-plagiarism, and conformance to guidelines. The principal purpose of essay writing is to present the author's evaluation concerning a singular subject about which they have made. Since Professionalism is the mother of every success, try our team of experienced writers in helping you complete your essays and other assignments.
You have been trying to join that prestigious institution you long yearned for, but the hurdle of an admission essay has become a stumbling block. We have your back, with our proven team that has gained invaluable experience over time, your chance of joining that institution is now! Just let us work on that essay.How do you write an admission essay? How do you begin the essay? For answers, try Quality Custom Writers Now!
Editing and Proofreading
Regardless of whether you're pleased with your composing abilities, it's never an impractical notion to have a second eye go through your work. The best editing services leaves no mistake untouched. We recognize the stuff needed to polish up a writing; as a component of our editing and proofreading, we'll change and refine your write up to guarantee it's amazing, and blunder free. Our group of expert editors will examine your work, giving an impeccable touch of English while ensuring your punctuation and sentence structures are top-notch.
We pride ourselves in having a team of clinical writers. The stringent and rigorous vetting process ensures that only the best persons for job. We hire qualified PhD and MA writers only. We equally offer our team of writers bonuses and incentives to motivate their working spirit in terms of delivering original, unique, and informative content. They are our resources drawn from diverse fields. Therefore your technical paper is in the right hands. Every paper is assessed and only the writers with the technical know-how in that field get to work on it.
College Essay Writing
If all along you have been looking for a trustworthy college essay service provider that provides superb academic papers at reasonable prices, then be glad that you search has ended with us. We are your best choice! Get high-quality college essay writing from our magnificent team of knowledgeable and dedicated writers right now!
Quality Assignment/Homework Help
We give the students premium quality assignments, without alarming them with plagiarism and referencing issues. We ensure that the assignments stick to the rules given by the tutors. We are specific about the deadlines you give us. We assure you that you will get your papers well in advance, knowing that you will review and return it if there are any changes, which should be incorporated.