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Unformatted text preview: 1. The excess return required on a risky investment over that of a riskfree investment is called the: Student Response Correct Answer A. inflation premium. B. required return. C. real return. D. average actual return. E. risk premium. Score: 10/10 2. The mean plus or minus the standard deviation for a normal distribution provides a probability range of _____ percent. Score: 10/10 3. According to the Efficient Market Hypothesis all informed investors will earn: Score: 10/10 4. Last year, Neal invested $5,000 in Tattler's stock, $5,000 in longterm government bonds, and $5,000 in U.S. Treasury bills. Over the course of the year, he earned returns of 9.7 percent, 5.4 percent, and 3.8 percent, respectively. What was the risk premium on Tattler's stock for the year? Score: 10/10 5. This morning, you sold a dividendpaying stock that you purchased last year. Your total percentage return is equal to: Score: 10/10 6. If the financial markets are efficient then: Score: 10/10 7. Over the last four years, the stock of Wagner's Paints has had an arithmetic average return of 6.5 percent. Three of those four years produced returns of 9 percent, 3 percent, and 1 percent. What is the geometric average return for this 4year period? Score: 10/10 8. Which one of the following statements is correct based on the historical record for 19262006? Score: 10/10 9. Which one of the following statements is correct? Score: 10/10 10. Mountain Minerals pays a constant annual dividend. One year ago, when you purchased shares of that stock at $40 a share, the dividend yield was 6.5 percent. Over this past year, the inflation rate has been 3.2 percent. Today, the required return on this stock is 9.8 percent and you just sold all of your shares. What is your total real return on this investment? Score: 10/10 1. Last year, Neal invested $5,000 in Tattler's stock, $5,000 in longterm government bonds, and $5,000 in U.S. Treasury bills. Over the course of the year, he earned returns of 9.7 percent, 5.4 percent, and 3.8 percent, respectively. What was the risk premium on Tattler's stock for the year? Score: 10/10 2. One year ago, you purchased 200 shares of stock for $29 a share. The stock pays $.60 a share in dividends each year. Today, you sold your shares for $31.60 a share. What is your total dollar return on this investment? Score: 10/10 3. The mean plus or minus the standard deviation for a normal distribution provides a probability range of _____...
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 Spring '08
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