Chapter5 HW - Chapter 5 1. The _ average ignores...

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Chapter 5 1. The ______ average ignores compounding. A) geometric B) arithmetic C) both a and b above D) none of the above 2. The complete portfolio refers to the investment in __________. A) the risk-free asset B) the risky portfolio C) the sum of a and b D) the difference between a and b 3. The holding period return on a stock is equal to __________. A) the capital gain yield over the period plus the inflation rate B) the capital gain yield over the period plus the dividend yield C) the current yield plus the dividend yield D) the dividend yield plus the risk premium 4. The return on an asset over a period between portfolio revisions is called __________. A) a holding period return B) a market return C) a risk-free return D) an instantaneous return 5. The dollar weighted return is the same as the __________. A) difference between cash inflows and cash outflows B) arithmetic average return C) geometric average return D) internal rate of return 1
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6. The risk-free rate is usually approximated by ___________. A) the return on bank savings accounts B) the return on Treasury bills C) the return on money market mutual funds D) None of the above 7. The market risk premium is defined as ___________. A) the difference between the return on an index fund and the return on Treasury bills B) the difference between the return on a small firm mutual fund and the return on the Standard and Poor's 500 index C) the difference between the return on the risky asset with the lowest returns and the return on Treasury bills
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This note was uploaded on 02/09/2009 for the course FI 312 taught by Professor Seo during the Spring '09 term at Michigan State University.

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Chapter5 HW - Chapter 5 1. The _ average ignores...

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