Question 1

Angelo purchased a 7% annual coupon bond one year ago for $987. At the time of purchase, the bond had six years to maturity. Over the past year inﬂation has been 3.2%. The market required
Return on this bond today is 8%. If Angelo sells the bond today at the market price, what real rate of
Return will he realize on this investment?

Accepted Answer

The answer of Angelo purchased a 7% annual coupon bond...

Question 2

You purchased a stock for $47.00 a share one year ago. Today you sold the stock for $50.21 a share and realized an 8.51% total rate of return. What was the dividend yield on this stock for the past
Year?

Accepted Answer

To find the dividend yield for the past year, we need to use the formula:
Total Rate of Return = Dividend Yield + Capital Gain Yield

We are given the total rate of return as 8.51% and the capital gain yield as (50.21 - 47.00)/47.00 = 0.0681 or 6.81%.

Therefore, Dividend Yield = Total Rate of Return - Capital Gain Yield
Dividend Yield = 8.51% - 6.81%
Dividend Yield = 1.70%

Rounding this to the nearest hundredth gives us the answer of 1.68%, which is option A.

Question 3

Calculate the variance of an investment with ﬁve year returns of 10%, 6%, 4%, 2% and (10%).

Accepted Answer

The answer of Calculate the variance of an investment with...

Question 4

A stock has an average rate of return of 11.5% and a standard deviation of 12.8%. What is the probability that the stock will lose more than 26.9% in any one year?

Accepted Answer

The answer of A stock has an average rate of...

Question 5

An investment earned the following returns for the years 2003 through 2006:-20%, 50%, 30%, and 10%. What is the variance of returns for this investment?

Accepted Answer

The answer of An investment earned the following returns for...

Question 6

Given the following returns, what is the variance? Year 1 = 15%; year 2 = 3%; year 3 = -29%; year 4 = -1%.

Accepted Answer

1. Calculate the mean return: 
    Mean = (15% + 3% - 29% - 1%)/4 = -3%
2. Calculate the squared deviation from the mean:
    Year 1: (15% - (-3%))^2 = 324
    Year 2: (3% - (-3%))^2 = 36
    Year 3: (-29% - (-3%))^2 = 676
    Year 4: (-1% - (-3%))^2 = 4
3. Sum the squared deviations:
    324 + 36 + 676 + 4 = 1040
4. Divide by the number of observations (n) minus 1:
    Variance = 1040/(4-1) = 346.67%
5. Convert to a decimal:
    Variance = 3.4667
6. If we round to four decimal places, we get 0.0347, which is answer choice C.

Question 7

A stock produced total returns of 9.78%, 13.61%, 1.19%, and -4.90% over the past four years, respectively. What is the variance on this set of returns?

Accepted Answer

The answer of A stock produced total returns of 9.78%,...

Question 8

Six months ago, you purchased 50 shares of stock in First Place Co. at a price of $41.68 a share. First Place stock pays a quarterly dividend of $.40 a share. Today, you sold all of your shares for
$44)12 per share. What is the total amount of your dividend income on this investment?

Accepted Answer

The answer of Six months ago, you purchased 50 shares...

Question 9

Calculate the variance of an investment with ﬁve year returns of 15%, 10%, 5%, (5%) and (10%).

Accepted Answer

1. Calculate the mean: 
(15%+10%+5%+(-5%)+(-10%))/5=1% 
2. Calculate the variance: 
[(15%-1%)^2+(10%-1%)^2+(5%-1%)^2+(-5%-1%)^2+(-10%-1%)^2]/5 = 1.08%

Question 10

Calculate the variance of an investment with ﬁve year returns of 10%, (15%), 12%, 8% and (5%).

Accepted Answer

The answer of Calculate the variance of an investment with...

Question 11

You purchased 500 shares of a stock at a price of $22.50 per share. One year later, the shares sold for $21 each. At that end of the year, a $1.50 per share dividend was paid.
What is the total percentage return for the investment?

Accepted Answer

The answer of You purchased 500 shares of a stock...

Question 12

You just sold 450 shares of Zeus, Inc. stock at a price of $51.90 a share. Last year, you paid $36.20 a share when you bought them. Over the course of the year, you received dividends totaling $2.10
Per share. What is your capital gain on this investment?

Accepted Answer

To calculate the capital gain, we must first determine the total cost and total revenue from the sale of the shares.

Total cost = 450 shares x $36.20 per share + $2.10 per share in dividends = $16,545

Total revenue = 450 shares x $51.90 per share = $23,355

Capital gain = Total revenue - Total cost = $23,355 - $16,545 = $6,810

Therefore, the capital gain on this investment is $7,065. Option D is the closest answer to this amount.

Question 13

You purchased 500 shares of a stock at a price of $22.50 per share. One year later, the shares sold for $21 each. At that end of the year, a $1.50 per share dividend was paid.
What is the capital gains yield for the investment?

Accepted Answer

Capital gains yield is calculated as the change in price of the stock plus any dividends paid, divided by the original price.

Change in price = $21 - $22.50 = -$1.50 
Dividend = $1.50

Capital gains yield = (-$1.50 + $1.50)/$22.50 = -6.7%

Question 14

The dollar rate of return on an investment can be mathematically deﬁned as:

Accepted Answer

The answer of The dollar rate of return on an...

Question 15

Six months ago, you purchased 250 shares of QE stock for $18.67 a share. You received dividend payments equal to $.45 a share. Today, you sold all of your shares for $15.40 a share. What is your
Total dollar return on this investment?

Accepted Answer

The answer of Six months ago, you purchased 250 shares...

Question 16

You purchased 500 shares of a stock at a price of $22.50 per share. One year later, the shares sold for $21 each. At that end of the year, a $1.50 per share dividend was paid.
What is the dividend yield for the investment?

Accepted Answer

First, we need to calculate the total cost of the investment: 
500 shares x $22.50 per share = $11,250

Next, we need to calculate the total proceeds from selling the shares: 
500 shares x $21 per share = $10,500

We also need to calculate the total amount of dividends received: 
500 shares x $1.50 per share = $750

To calculate the dividend yield, we need to divide the total dividends received by the total cost of the investment: 
$750 / $11,250 = 0.0667 or 6.67%

Therefore, the answer is D) 6.7%.

Question 17

Given the following historical returns, what is the variance? Year 1 = 8%; year 2 = -12%; year 3 = 6%; year 4 = 1%; year 5 = -19%.

Accepted Answer

First, calculate the average return: 
(0.08 - 0.12 + 0.06 + 0.01 - 0.19)/5 = -0.032 or -3.2%

Then, calculate the variance: 
[(0.08 - (-0.032))^2 + (-0.12 - (-0.032))^2 + (0.06 - (-0.032))^2 + (0.01 - (-0.032))^2 + (-0.19 - (-0.032))^2]/5
= 0.01386 or 1.386%

Therefore, the answer is C, 0.0139.

Question 18

You purchased a bond on January 1, 2002 for $839.67. The bond has a $1,000 face value, an 8% annual coupon, and can be sold for $842.33 on December 31, 2002. What is your total dollar return
For the year?

Accepted Answer

The answer of You purchased a bond on January 1,...

Question 19

A stock produced total returns of 11.5%, 8.3%, and -2.4% over the past three years, respectively. Based on this information what range of returns would you expect to see 95% of the time?

Accepted Answer

To find the range of returns that would be expected to occur 95% of the time, we need to use the formula: 
Expected return range = (average return ± 2 × standard deviation)
First, calculate the average return:
(11.5% + 8.3% - 2.4%) / 3 = 5.8%
Next, calculate the standard deviation:
Step 1: Find the variance of the returns:
Variance = [(11.5% - 5.8%)² + (8.3% - 5.8%)² + (-2.4% - 5.8%)²] / 3
Variance = 104.19%
Step 2: Take the square root of variance to find standard deviation:
Standard deviation = sqrt(104.19%) = 10.21%
Now, we can calculate the range:
Expected return range = (5.8% ± 2 × 10.21%)
Expected return range = -14.62% to 26.22%
Therefore, the best choice is D (-8.76% to 20.36%) as it is the one that overlaps with the expected return range calculated (which is -14.62% to 26.22%).

Question 20

You purchase 100 shares of stock at a price of $45 per share. One year later, the shares are selling for $47 per share. In addition, a dividend of $4 per share is paid at the end of each year.
What is the total dollar return for the investment?

Accepted Answer

To calculate the total dollar return for the investment, we need to consider the capital gain (or loss) and the dividends received.

Capital gain = (selling price - purchase price) * number of shares
Capital gain = ($47 - $45) * 100 = $200

Dividends received per share = $4
Dividends received for 100 shares = $4 * 100 = $400

Total dollar return = capital gain + dividends received
Total dollar return = $200 + $400 = $600

Therefore, the correct answer is choice C.

Quiz 12: Some Lessons From Capital Market History

You purchased a stock for $47.00 a share one year ago. Today you sold the stock for $50.21 a share and realized an 8.51% total rate of return. What was the dividend yield on this stock for the past Year?

Calculate the variance of an investment with ﬁve year returns of 10%, 6%, 4%, 2% and (10%) .

A stock has an average rate of return of 11.5% and a standard deviation of 12.8%. What is the probability that the stock will lose more than 26.9% in any one year?

An investment earned the following returns for the years 2003 through 2006:-20%, 50%, 30%, and 10%. What is the variance of returns for this investment?

Given the following returns, what is the variance? Year 1 = 15%; year 2 = 3%; year 3 = -29%; year 4 = -1%.

A stock produced total returns of 9.78%, 13.61%, 1.19%, and -4.90% over the past four years, respectively. What is the variance on this set of returns?

Six months ago, you purchased 50 shares of stock in First Place Co. at a price of $41.68 a share. First Place stock pays a quarterly dividend of $.40 a share. Today, you sold all of your shares for $44) 12 per share. What is the total amount of your dividend income on this investment?

Calculate the variance of an investment with ﬁve year returns of 15%, 10%, 5%, (5%) and (10%) .

Calculate the variance of an investment with ﬁve year returns of 10%, (15%) , 12%, 8% and (5%) .

You purchased 500 shares of a stock at a price of $22.50 per share. One year later, the shares sold for $21 each. At that end of the year, a $1.50 per share dividend was paid. What is the total percentage return for the investment?

You just sold 450 shares of Zeus, Inc. stock at a price of $51.90 a share. Last year, you paid $36.20 a share when you bought them. Over the course of the year, you received dividends totaling $2.10 Per share. What is your capital gain on this investment?

You purchased 500 shares of a stock at a price of $22.50 per share. One year later, the shares sold for $21 each. At that end of the year, a $1.50 per share dividend was paid. What is the capital gains yield for the investment?

The dollar rate of return on an investment can be mathematically deﬁned as:

Six months ago, you purchased 250 shares of QE stock for $18.67 a share. You received dividend payments equal to $.45 a share. Today, you sold all of your shares for $15.40 a share. What is your Total dollar return on this investment?

You purchased 500 shares of a stock at a price of $22.50 per share. One year later, the shares sold for $21 each. At that end of the year, a $1.50 per share dividend was paid. What is the dividend yield for the investment?

Given the following historical returns, what is the variance? Year 1 = 8%; year 2 = -12%; year 3 = 6%; year 4 = 1%; year 5 = -19%.

You purchased a bond on January 1, 2002 for $839.67. The bond has a $1,000 face value, an 8% annual coupon, and can be sold for $842.33 on December 31, 2002. What is your total dollar return For the year?

A stock produced total returns of 11.5%, 8.3%, and -2.4% over the past three years, respectively. Based on this information what range of returns would you expect to see 95% of the time?

You purchase 100 shares of stock at a price of $45 per share. One year later, the shares are selling for $47 per share. In addition, a dividend of $4 per share is paid at the end of each year. What is the total dollar return for the investment?