Question 1

Which one of the following has a rate of return that is used as a proxy for the risk-free rate?

Accepted Answer

A)  long-term government bonds
B)  long-term corporate bonds
C)  inflation,as measured by the consumer price index
D)  treasury notes
E)  large-company stocksF) A) and B)
G) A) and E)

Question 2

You have observed the returns for an investment in Telstra shares for the last five years.This shows returns of 23 per cent,-17 per cent,8 per cent,22 per cent,and 3 per cent.The stock has an average return of ______ per cent and a standard deviation of _____ per cent.

Accepted Answer

A)  7.80;13.54
B)  7.80;14.63
C)  7.80;16.36
D)  14.60;14.63
E)  14.60;16.36F) None of the above
G) A) and D)

Question 3

The lower the standard deviation of returns on a security,the _____ the expected rate of return and the _____ the risk.

Accepted Answer

A)  lower;lower
B)  lower;higher
C)  higher;lower
D)  higher;higher
E)  You cannot determine anything about the expected rate of return from the standard deviation.F) D) and E)
G) C) and E)

Question 4

One year ago,you purchased 400 shares of stock for $12 a share.The stock pays $0.22 a share in dividends each year.Today,you sold your shares for $28.30 a share.What is your total dollar return on this investment?

Accepted Answer

A)  $6222
B)  $6432
C)  $6520
D)  $6220
E)  $6608F) A) and B)
G) D) and E)

Question 5

One of the biggest Australian companies' stock returned 9.37%,-3.55% and 11.55% over the past three years,respectively.What is the arithmetic average return for this period?

Accepted Answer

A)  8.16%
B)  5.79%
C)  8.68%
D)  9.37%
E)  4.46%F) A) and B)
G) A) and C)

Question 6

Which one of the following combinations will always result in an increased dividend yield?

Accepted Answer

A)  increase in the stock price combined with a lower dividend amount
B)  increase in the stock price combined with a higher dividend amount
C)  decrease in the stock price combined with a lower dividend amount
D)  decrease in the stock price combined with a higher dividend amount
E)  increase in the stock price combined with a constant dividend amountF) A) and E)
G) All of the above

Question 7

Which one of the following supports the argument that financial markets are semistrong-form efficient?

Accepted Answer

A)  Financial analysts gain a marketplace advantage by studying financial statements.
B)  Only company insiders have a marketplace advantage.
C)  Only historical information is reflected in the market prices of securities.
D)  All information,public and private,is included in current market prices.
E)  Technical analysis based on price patterns provides a marketplace advantage.F) A) and E)
G) B) and C)

Question 8

A year ago,Fred purchased 300 shares of RPJ stock for $14 400.The stock is currently selling for $36 a share and Fred has decided to sell all of his shares.What is the total return that Fred has earned on this investment if he received a special dividend of $5 a share?

Accepted Answer

A)  -25.00 per cent
B)  -19.44 per cent
C)  -14.58 per cent
D)  -8.89 per cent
E)  -1.38 per centF) None of the above
G) C) and E)

Question 9

If the financial markets are efficient then:

Accepted Answer

A)  stock prices should remain constant
B)  stock prices should increase or decrease slowly as new events are analysed and the information is absorbed by the markets
C)  an increase in the value of one security should be offset by a decrease in the value of another security
D)  stock prices will only change when an event actually occurs,not at the time the event is anticipated
E)  stock prices should only respond to unexpected news and eventsF) C) and E)
G) D) and E)

Question 10

Which one of the following best describes an arithmetic average return?

Accepted Answer

A)  total return divided by N - 1,where N equals the number of individual returns
B)  average compound return earned per year over a multi-year period
C)  total compound return divided by the number of individual returns
D)  return earned in an average year over a multi-year period
E)  positive square root of the average compound returnF) A) and C)
G) C) and D)

Exam 10: Some Lessons From Capital Market History

Which one of the following best describes an arithmetic average return?

Correct Answer
verified

One of the biggest Australian companies' stock returned 9.37%,-3.55% and 11.55% over the past three years,respectively.What is the arithmetic average return for this period?

Correct Answer
verified

One year ago,you purchased 400 shares of stock for $12 a share.The stock pays $0.22 a share in dividends each year.Today,you sold your shares for $28.30 a share.What is your total dollar return on this investment?

Correct Answer
verified

A year ago,Fred purchased 300 shares of RPJ stock for $14 400.The stock is currently selling for $36 a share and Fred has decided to sell all of his shares.What is the total return that Fred has earned on this investment if he received a special dividend of $5 a share?

Correct Answer
verified

The lower the standard deviation of returns on a security,the _ the expected rate of return and the _ the risk.

Correct Answer
verified

You have observed the returns for an investment in Telstra shares for the last five years.This shows returns of 23 per cent,-17 per cent,8 per cent,22 per cent,and 3 per cent.The stock has an average return of __ per cent and a standard deviation of _ per cent.

Correct Answer
verified

If the financial markets are efficient then:

Correct Answer
verified

Which one of the following combinations will always result in an increased dividend yield?

Correct Answer
verified

Which one of the following has a rate of return that is used as a proxy for the risk-free rate?

Correct Answer
verified

Which one of the following supports the argument that financial markets are semistrong-form efficient?

Correct Answer
verified

Exam 10: Some Lessons From Capital Market History

Which one of the following best describes an arithmetic average return?

Correct AnswerverifiedShow Answer

One of the biggest Australian companies' stock returned 9.37%,-3.55% and 11.55% over the past three years,respectively.What is the arithmetic average return for this period?

Correct AnswerverifiedShow Answer

One year ago,you purchased 400 shares of stock for $12 a share.The stock pays $0.22 a share in dividends each year.Today,you sold your shares for $28.30 a share.What is your total dollar return on this investment?

Correct AnswerverifiedShow Answer

A year ago,Fred purchased 300 shares of RPJ stock for $14 400.The stock is currently selling for $36 a share and Fred has decided to sell all of his shares.What is the total return that Fred has earned on this investment if he received a special dividend of $5 a share?

Correct AnswerverifiedShow Answer

The lower the standard deviation of returns on a security,the _____ the expected rate of return and the _____ the risk.

Correct AnswerverifiedShow Answer

You have observed the returns for an investment in Telstra shares for the last five years.This shows returns of 23 per cent,-17 per cent,8 per cent,22 per cent,and 3 per cent.The stock has an average return of ______ per cent and a standard deviation of _____ per cent.

Correct AnswerverifiedShow Answer

If the financial markets are efficient then:

Correct AnswerverifiedShow Answer

Which one of the following combinations will always result in an increased dividend yield?

Correct AnswerverifiedShow Answer

Which one of the following has a rate of return that is used as a proxy for the risk-free rate?

Correct AnswerverifiedShow Answer

Which one of the following supports the argument that financial markets are semistrong-form efficient?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The lower the standard deviation of returns on a security,the _ the expected rate of return and the _ the risk.

Correct Answer
verified

You have observed the returns for an investment in Telstra shares for the last five years.This shows returns of 23 per cent,-17 per cent,8 per cent,22 per cent,and 3 per cent.The stock has an average return of __ per cent and a standard deviation of _ per cent.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified