Question 1

Suppose you bought a$1,000 face value bond with a 5 percent coupon one year ago for $1,020.The bond sells today for $986.If the inflation rate last year was 2.3 percent,what was your total real rate of return on this investment?

Accepted Answer

The answer of Suppose you bought a$1,000 face value bond...

Question 2

Over the past four years,a stock produced returns of 13 percent,-9 percent,8 percent,and 14 percent,respectively.Based on these four years,what range of returns would you expect to see 99 percent of the time?

Accepted Answer

The answer of Over the past four years,a stock produced...

Question 3

A stock produced returns of 11 percent,19 percent,and 2 percent over three of the past four years,respectively.The arithmetic average for the past four years is 9 percent.What is the standard deviation of the stock's returns for the four-year period?

Accepted Answer

The answer of A stock produced returns of 11 percent,19...

Question 4

Over the last four years,a stock has had an arithmetic average return of 12.8 percent.Three of those four years produced returns of 22.6 percent,15.2 percent,and -24.1 percent,respectively.What is the geometric average return for this four-year period?

Accepted Answer

The answer of Over the last four years,a stock has...

Question 5

A stock has yielded returns of 9 percent,16 percent,18 percent,and -6 percent over the past four years,respectively.What is the standard deviation of these returns?

Accepted Answer

The answer of A stock has yielded returns of 9...

Question 6

Home Grown Tomatoes stock returned 11.6 percent,3.2 percent,8.1 percent,14.2,and 9.8 percent over the past five years,respectively.What is the arithmetic average return for this period?

Accepted Answer

The answer of Home Grown Tomatoes stock returned 11.6 percent,3.2...

Question 7

A security produced returns of 12 percent,-11 percent,-2 percent,15 percent,and 9 percent over the past five years,respectively.Based on these five years,what is the probability that an investor in this stock will lose more than 17.06 percent in any one given year?

Accepted Answer

The answer of A security produced returns of 12 percent,-11...

Question 8

You own a stock with an average return of 14.6 percent and a standard deviation of 21.2 percent.In any one given year,you have a 95 percent chance that you will not lose more than _____ percent nor earn more than ____ percent on this stock.

Accepted Answer

The answer of You own a stock with an average...

Question 9

A security produced returns of 11 percent,7 percent,9 percent,13 percent,and -14 percent over the past five years,respectively.Based on these five years,what is the probability that this stock will earn more than 16.16 percent in any one given year?

Accepted Answer

The answer of A security produced returns of 11 percent,7...

Question 10

A bond has an average return of 11.2 percent and a standard deviation of 14.6 percent.What range of returns would you expect to see 68 percent of the time on this security?

Accepted Answer

To calculate the range of returns that we can expect with 68% certainty, we need to use the empirical rule. According to this rule, 68% of the data falls within one standard deviation of the mean.

So, to calculate the range of returns that fall within one standard deviation of the mean, we can use the following formula:

Range of returns = (average return +/- standard deviation)

Substituting the values given in the question, we get:

Range of returns = (11.2% +/- 14.6%)

Range of returns = (11.2% - 14.6%, 11.2% + 14.6%)

Range of returns = (-3.4%, 25.8%)

Therefore, the correct answer is D, (-3.4% to 25.8%).

Question 11

A stock has returns for five years of 14 percent,-16 percent,12 percent,23 percent,and 4 percent,respectively.The stock has an average return of ______ percent and a standard deviation of _____ percent.

Accepted Answer

The answer of A stock has returns for five years...

Question 12

A stock has produced returns of 11.9 percent,5.6 percent,16.4 percent,and -4.2 percent over the past four years,respectively.What is the geometric average return?

Accepted Answer

The answer of A stock has produced returns of 11.9...

Question 13

Over the last four years,the common stock of Plymouth Shippers has had an arithmetic average return of 10.4 percent.Three of those four years produced returns of 16.1 percent,15.6 percent,and 9.4 percent,respectively.What is the geometric average return for this four-year period?

Accepted Answer

The answer of Over the last four years,the common stock...

Question 14

The common stock of Mountain Farms has yielded 14.2 percent,11.7 percent,3.4 percent,-2.8 percent,and 15.8 percent over the past five years,respectively.What is the geometric average return?

Accepted Answer

The geometric average return can be calculated by taking the nth root of the product of (1+R), where R is the return for each year. 
Geometric average return = [(1+0.142)(1+0.117)(1+0.034)(1-0.028)(1+0.158)]^(1/5) - 1 = 0.0822 or 8.22%. 
Therefore, the correct answer is C.

Question 15

Over the past four years,the annual percentage returns on large-company stocks were 15,7,4,and 18 percent.For the same time period,U.S.Treasury bills produced the returns of 6,3,2,and 4 percent.Inflation averaged 2.8 percent over the four-year period.The average real rate of return on large-company stocks was ___ percent as compared to _____ percent for Treasury bills.

Accepted Answer

The answer of Over the past four years,the annual percentage...

Question 16

You purchased 400 shares of KNO stock five years ago and have earned annual returns of 8.3 percent,9.6 percent,18.25 percent,-7.7 percent,and 1.8 percent,respectively.What is your arithmetic average return?

Accepted Answer

The answer of You purchased 400 shares of KNO stock...

Question 17

A stock produced returns of 14 percent,17percent,and -1 percent over three of the past four years,respectively.The arithmetic average for the past four years is 6 percent.What is the standard deviation of the stock's returns for the four-year period?

Accepted Answer

The answer of A stock produced returns of 14 percent,17percent,and...

Question 18

Over the past four years,a stock produced returns of 6 percent,8 percent,19 percent,and 2 percent,respectively.Based on these four years,what range of returns would you expect to see 95 percent of the time?

Accepted Answer

The answer of Over the past four years,a stock produced...

Question 19

Kelly decided to accept the risk and purchased a high growth stock.Her returns for the past five years are 32 percent,24 percent,-48 percent,12 percent,and -9 percent,respectively.What is the standard deviation of these returns?

Accepted Answer

The answer of Kelly decided to accept the risk and...

Question 20

Suppose a stock had an initial price of $36 per share,paid a dividend of $.42 per share during the year,and had an ending share price of $34.What was the capital gains yield?

Accepted Answer

Capital gains yield = (Ending share price - Initial share price) / Initial share price
= ($34 - $36) / $36
= -0.0556 or -5.56%
Note that the yield is negative since the ending share price is lower than the initial share price.

Quiz 10: Some Lessons From Capital Market History

Suppose you bought a$1,000 face value bond with a 5 percent coupon one year ago for $1,020.The bond sells today for $986.If the inflation rate last year was 2.3 percent,what was your total real rate of return on this investment?

Over the past four years,a stock produced returns of 13 percent,-9 percent,8 percent,and 14 percent,respectively.Based on these four years,what range of returns would you expect to see 99 percent of the time?

A stock produced returns of 11 percent,19 percent,and 2 percent over three of the past four years,respectively.The arithmetic average for the past four years is 9 percent.What is the standard deviation of the stock's returns for the four-year period?

Over the last four years,a stock has had an arithmetic average return of 12.8 percent.Three of those four years produced returns of 22.6 percent,15.2 percent,and -24.1 percent,respectively.What is the geometric average return for this four-year period?

A stock has yielded returns of 9 percent,16 percent,18 percent,and -6 percent over the past four years,respectively.What is the standard deviation of these returns?

Home Grown Tomatoes stock returned 11.6 percent,3.2 percent,8.1 percent,14.2,and 9.8 percent over the past five years,respectively.What is the arithmetic average return for this period?

A security produced returns of 12 percent,-11 percent,-2 percent,15 percent,and 9 percent over the past five years,respectively.Based on these five years,what is the probability that an investor in this stock will lose more than 17.06 percent in any one given year?

You own a stock with an average return of 14.6 percent and a standard deviation of 21.2 percent.In any one given year,you have a 95 percent chance that you will not lose more than _ percent nor earn more than percent on this stock.

A security produced returns of 11 percent,7 percent,9 percent,13 percent,and -14 percent over the past five years,respectively.Based on these five years,what is the probability that this stock will earn more than 16.16 percent in any one given year?

A bond has an average return of 11.2 percent and a standard deviation of 14.6 percent.What range of returns would you expect to see 68 percent of the time on this security?

A stock has returns for five years of 14 percent,-16 percent,12 percent,23 percent,and 4 percent,respectively.The stock has an average return of __ percent and a standard deviation of _ percent.

A stock has produced returns of 11.9 percent,5.6 percent,16.4 percent,and -4.2 percent over the past four years,respectively.What is the geometric average return?

Over the last four years,the common stock of Plymouth Shippers has had an arithmetic average return of 10.4 percent.Three of those four years produced returns of 16.1 percent,15.6 percent,and 9.4 percent,respectively.What is the geometric average return for this four-year period?

The common stock of Mountain Farms has yielded 14.2 percent,11.7 percent,3.4 percent,-2.8 percent,and 15.8 percent over the past five years,respectively.What is the geometric average return?

You purchased 400 shares of KNO stock five years ago and have earned annual returns of 8.3 percent,9.6 percent,18.25 percent,-7.7 percent,and 1.8 percent,respectively.What is your arithmetic average return?

A stock produced returns of 14 percent,17percent,and -1 percent over three of the past four years,respectively.The arithmetic average for the past four years is 6 percent.What is the standard deviation of the stock's returns for the four-year period?

Over the past four years,a stock produced returns of 6 percent,8 percent,19 percent,and 2 percent,respectively.Based on these four years,what range of returns would you expect to see 95 percent of the time?

Kelly decided to accept the risk and purchased a high growth stock.Her returns for the past five years are 32 percent,24 percent,-48 percent,12 percent,and -9 percent,respectively.What is the standard deviation of these returns?

Suppose a stock had an initial price of $36 per share,paid a dividend of $.42 per share during the year,and had an ending share price of $34.What was the capital gains yield?