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Unformatted text preview: FIN 3716 Quiz #8 Key 1. What are the arithmetic and geometric average returns for a stock with annual returns of 26 percent, 4 percent, 30 percent, 43 percent, and 7 percent? A . 10.0 percent; 7.0 percent b. 10.0 percent; 8.8 percent c. 10.0 percent; 21.8 percent d. 12.5 percent; 7.0 percent e. 12.5 percent; 8.8 percent Arithmetic average = (.26 + .04 .30 + .43 + .07) / 5 = 10.0 percent; Geometric return = (1.26 1.04 .70 1.43 1.07) .20 1 = 7.0 percent AACSB TOPIC: ANALYTIC Ross - Chapter 012 #78 SECTION: 12.5 TOPIC: ARITHMETIC VS. GEOMETRIC AVERAGES TYPE: PROBLEMS 2. The capital gains yield considers which of the following? I. the ending, or sale, price of a security II. the average price of a security over a stated period of time III. any dividend income received IV. the beginning value, or cost, of a security a. I and III only b. II and IV only C . I and IV only d. I, III, and IV only e. I, II, III, and IV Ross - Chapter 012 #12 SECTION: 12.1 TOPIC: CAPITAL GAIN TYPE: CONCEPTS 3. The notion that capital markets, such as the NYSE, price securities fairly based on available information is 3....
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This note was uploaded on 12/14/2010 for the course FIN 3716 taught by Professor Fang during the Fall '10 term at LSU.
- Fall '10