Question 1

Today, you sold 200 shares of SLG, Inc. stock. Your total return on these shares is 12.5%. You purchased the shares one year ago at a price of $28.50 a share. You have received a total of $280
In dividends over the course of the year. What is your capital gains yield on this investment?

Accepted Answer

To find the capital gains yield, first calculate the total return in dollar terms: 200 shares * $28.50 = $5,700 initial investment. A 12.5% total return on $5,700 is $712.50. Subtract the dividends received ($280) from the total return to find the capital gain: $712.50 - $280 = $432.50. The capital gains yield is then $432.50 / $5,700 = 0.0759 or 7.59%.

Question 2

An investor purchases 500 shares of a company at a purchase price of $15.00 at the start of the year. During the year, the company paid out $0.50 of dividends per share. The investor then sells all
The shares at a selling price of $13.50. Determine the investor's total percentage return.

Accepted Answer

The answer of An investor purchases 500 shares of a...

Question 3

A stock had returns of 6%, 13%, -11%, and 17% over the past four years. What is the geometric average return for this time period?

Accepted Answer

The geometric average return is calculated as the fourth root of the product of (1 + return) for each year, minus 1. 
(1.06)(1.13)(0.89)(1.17) = 1.0979
Fourth root of 1.0979 minus 1 equals 0.0572 or 5.7%. So the best choice is B.

Question 4

One year ago, you purchased a stock at a price of $32 a share. Today, you sold the stock and realized a total return of 25%. Your capital gain was $6 a share. What was your dividend yield on
This stock?

Accepted Answer

The answer of One year ago, you purchased a stock...

Question 5

Ajax Corporation has experienced returns of 12%, 15%, 8% and 2% returns over the past four years. Given this information, calculate the company's standard deviation.

Accepted Answer

The answer of Ajax Corporation has experienced returns of 12%,...

Question 6

You purchased 300 shares of stock at a price of $35.86 per share. Over the last year, you have received total dividend income of $336. What is the dividend yield?

Accepted Answer

First, calculate the total cost of the stock purchase:

300 shares x $35.86 per share = $10,758

Next, calculate the dividend yield:

Dividend yield = (Total dividends received / Total cost of investment) x 100%

Dividend yield = ($336 / $10,758) x 100% = 3.12%

Therefore, the dividend yield is approximately 3.1%. Choose B.

Question 7

LK Pattern Shops had the following prices and dividends for the past 4 years. What is the geometric average rate of return on this stock based on this period of time?

Accepted Answer

The answer of LK Pattern Shops had the following prices...

Question 8

You purchased 500 shares of Brown Stone stock for $41.80 a share. You have received a total of $820 in dividends and $7,280 in proceeds from selling the shares. What is your capital gains yield
On this stock?

Accepted Answer

Capital gains yield = (Proceeds from selling the shares - Purchase price of the shares + Dividends received) / Purchase price of the shares= (7,280 - 500 * 41.80 + 820) / (500 * 41.80)= 34.83%

Question 9

Use the following historical average returns and standard deviations to answer the question below.  What is the historical risk premium of Canadian common stocks over long bonds?

Accepted Answer

The answer of Use the following historical average returns and...

Question 10

You purchased 200 shares of Hypex, Inc. stock for $38.12 a share. You have received a total of $290 in dividends and $8,130 in proceeds from selling the shares. What is your capital gains yield
On this stock?

Accepted Answer

Capital gains yield is calculated as (Selling Price - Purchase Price) / Purchase Price. Here, the purchase price is 200 shares * $38.12 = $7,624. The selling price is $8,130. Capital gains yield = ($8,130 - $7,624) / $7,624 = 6.6%.

Question 11

Marti purchased a stock one year ago at a price of $23.89. Over the past year she has received a total of $1.63 in dividends. Today she sold the stock for $22.84. What percentage total return did
Marti earn on this investment?

Accepted Answer

The total return is calculated by adding the dividends received to the gain (or loss) on the stock and then dividing by the purchase price. Marti's total return = (($22.84 - $23.89) + $1.63) / $23.89 = ($-1.05 + $1.63) / $23.89 = $0.58 / $23.89 = 0.0243 or 2.43%.

Question 12

If the returns on small-company stocks are normally distributed, which of the following returns would lie in a 99% conﬁdence interval around the mean, but not in a 95% conﬁdence interval?

Accepted Answer

A 99% confidence interval is wider than a 95% confidence interval. Therefore, a return that lies within the 99% interval but not the 95% interval would be closer to the tails. Among the options, 70% is likely to be in this range.

Question 13

Last year, Marsha purchased a stock at a price of $21.36 a share. Over the course of the year, she received $.60 in dividends per share while inﬂation averaged 3.2%. Today, Marsha sold her shares
For $22.80 a share. What is Marsha's real rate of return on this investment?

Accepted Answer

The answer of Last year, Marsha purchased a stock at...

Question 14

What is the amount of the excess return on a risk - free security if the risk - free rate is 4% and the market rate of return is 11%?

Accepted Answer

The answer of What is the amount of the excess...

Question 15

A stock had returns of 9%, -3%, 4%, and 15% over the past four years. What is the standard deviation of this stock for the past four years?

Accepted Answer

The answer of A stock had returns of 9%, -3%,...

Question 16

Over the past ﬁve years a stock produced annual returns of 11%, 16%, 5%, 2%, and 9%, respectively. Based on this information, what is the standard deviation for this stock?

Accepted Answer

The answer of Over the past ﬁve years a stock...

Question 17

You purchased 300 shares of Deltona, Inc. stock for $44.90 a share. You have received a total of $630 in dividends and $14,040 in proceeds from selling the shares. What is your capital gains yield
On this stock?

Accepted Answer

To calculate the capital gains yield, we first need to determine the total cost of the shares.

Total cost of shares = 300 x $44.90 = $13,470

Next, we can calculate the total gain from the sale of the shares.

Total gain = $14,040 - $13,470 = $570

Finally, we can calculate the capital gains yield as follows:

Capital gains yield = (Total gain / Total cost) x 100
Capital gains yield = ($570 / $13,470) x 100
Capital gains yield = 4.23%

Therefore, the correct answer is B.

Question 18

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

Accepted Answer

The answer of Calculate the geometric return of an investment...

Question 19

Assume the return on T-bills is normally distributed. Assuming a 68% probability, what is the highest return you would expect to earn on T-bills?

Accepted Answer

The answer of Assume the return on T-bills is normally...

Question 20

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

Accepted Answer

The answer of Calculate the arithmetic return of an investment...

Quiz 12: Some Lessons From Capital Market History

Today, you sold 200 shares of SLG, Inc. stock. Your total return on these shares is 12.5%. You purchased the shares one year ago at a price of $28.50 a share. You have received a total of $280 In dividends over the course of the year. What is your capital gains yield on this investment?

An investor purchases 500 shares of a company at a purchase price of $15.00 at the start of the year. During the year, the company paid out $0.50 of dividends per share. The investor then sells all The shares at a selling price of $13.50. Determine the investor's total percentage return.

A stock had returns of 6%, 13%, -11%, and 17% over the past four years. What is the geometric average return for this time period?

One year ago, you purchased a stock at a price of $32 a share. Today, you sold the stock and realized a total return of 25%. Your capital gain was $6 a share. What was your dividend yield on This stock?

Ajax Corporation has experienced returns of 12%, 15%, 8% and 2% returns over the past four years. Given this information, calculate the company's standard deviation.

You purchased 300 shares of stock at a price of $35.86 per share. Over the last year, you have received total dividend income of $336. What is the dividend yield?

LK Pattern Shops had the following prices and dividends for the past 4 years. What is the geometric average rate of return on this stock based on this period of time?

You purchased 500 shares of Brown Stone stock for $41.80 a share. You have received a total of $820 in dividends and $7,280 in proceeds from selling the shares. What is your capital gains yield On this stock?

Use the following historical average returns and standard deviations to answer the question below. What is the historical risk premium of Canadian common stocks over long bonds?

You purchased 200 shares of Hypex, Inc. stock for $38.12 a share. You have received a total of $290 in dividends and $8,130 in proceeds from selling the shares. What is your capital gains yield On this stock?

Marti purchased a stock one year ago at a price of $23.89. Over the past year she has received a total of $1.63 in dividends. Today she sold the stock for $22.84. What percentage total return did Marti earn on this investment?

If the returns on small-company stocks are normally distributed, which of the following returns would lie in a 99% conﬁdence interval around the mean, but not in a 95% conﬁdence interval?

Last year, Marsha purchased a stock at a price of $21.36 a share. Over the course of the year, she received $.60 in dividends per share while inﬂation averaged 3.2%. Today, Marsha sold her shares For $22.80 a share. What is Marsha's real rate of return on this investment?

What is the amount of the excess return on a risk - free security if the risk - free rate is 4% and the market rate of return is 11%?

A stock had returns of 9%, -3%, 4%, and 15% over the past four years. What is the standard deviation of this stock for the past four years?

Over the past ﬁve years a stock produced annual returns of 11%, 16%, 5%, 2%, and 9%, respectively. Based on this information, what is the standard deviation for this stock?

You purchased 300 shares of Deltona, Inc. stock for $44.90 a share. You have received a total of $630 in dividends and $14,040 in proceeds from selling the shares. What is your capital gains yield On this stock?

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

Assume the return on T-bills is normally distributed. Assuming a 68% probability, what is the highest return you would expect to earn on T-bills?

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