First Exam BUS 422
Dr. Jones
NAME___________________________________________
Fill in the Blanks: (3 points each)
Use 4 decimal places to the right of decimal to calculate the first 3 problems.
_____________ 1.
The geometric mean for inflation for 19202003 was 2.57%, and for the S&P 500 stocks
was 10.23%. The inflationadjusted geometric mean for common stocks was?
______________2. Treasury bills have a geometric mean of 3.91% for the period 19202003. The
cumulative wealth for Treasury bills was ?
______________3. Given the information in the previous two problems, what was the equity risk premium
for S&P stocks for 19202003?
_____________4.
IPOs
are considered transactions in the _________________ market.
_____________5. If inflation averages 3.6% on a compound annual basis, the purchasing power of money
will be cut in half in approximately _________
years.
____________
6. The divisor for the DJIA is .12495. On Sept. 20 the Dow goes up 80 points.
One of the
Dow stocks went up $5.50 on that day.
What % of the rise in the Dow on 9/20 was accounted for by the
movement in this one stock? Use two decimal places for this problem.
_____________7. An investor buys 100 shares of Bino at $52 per share on margin. The stock goes to $64
per share and the investor sells.
Ignoring all costs, the
percentage return on the investor’s equity
is
_____________8. The
geometric mean
for corporate bonds for the period
19202005
, assuming a
Cumulative Wealth of $153.39, will be (round answer to 2 decimals) ?
_____________9. You buy a German stock at 38 Euros, and it closes one year later at 47 Euros.
You collect
dividends of 2 Euros. The dollar depreciates against the Euro by 5%. Your
dollardenominated rate of
return
for the year is ?
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 Spring '08
 JONES
 Standard Deviation, Inflation, Money market, cumulative wealth

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