FIN5063 Chapter 12 Quiz

  1. A stock had annual returns of 11.3 percent, 9.8 percent, −7.3 percent, and 14.6 percent for the past four years. Based on this information, what is the 95 percent probability range of returns for any one given year?   −12.5 to 26.7 percent
  2. A stock had annual returns of 5.3 percent, −2.7 percent, 16.2 percent, and 13.6 percent over the past four years. Which one of the following best describes the probability that this stock will produce a return of 20 percent or more in a single year?   Less than 16 percent but more than 2.5 percent
  3. The excess return is computed as the:   return on a risky security minus the risk-free rate.
  4. The historical record for the period 1926-2016 supports which one of the following statements?  Small-company stocks have lost as much as 50 percent and gained as much as 100 percent in a single year.
  5. West Wind Tours stock is currently selling for $52.30 a share. The stock has a dividend yield of 2.48 percent. How much dividend income will you receive per year if you purchase 600 shares of this stock?   $778.22
  6. Which of the following statements are true based on the historical record for 1926-2016?  Bonds are generally a safer, or less risky, investment than are stocks.
  7. Which of the following yields on a stock can be negative?   Capital gains yield and total return
  8. Which one of the following had the least volatile annual returns over the period of 1926-2016?  US Treasury Bills
  9. Which one of the following statements is a correct reflection of the U.S. financial markets for the period 1926-2016?       U.S. Treasury bills had an annual return in excess of 10 percent in three or more years.
  10. Which one of the following time periods is associated with low rates of inflation?  2014-2015

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