hw3 - FINA 3313 Fall 2011 Homework 3 1 This homework is due...

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FINA 3313 Fall 2011 Homework 3 1. This homework is due on Wednesday December 7, 2011 at the very beginning of the class. Late submission will not be accepted. 2. It is strongly recommended that you do the homework without the collaborations with others. However, you may consult textbook/class notes if needed. 3. Please choose only one answer for each question and fill out the Scan-Tron form 882 (available from UTA bookstore) with the appropriate answer. Please submit Scan-Tron form only.
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1. What is the percentage return on a stock that was purchased for $40.00, paid a $3.00 dividend after one year and was then sold for $39.00? A. (2.50%) B. 2.50% C. 5.00% D. 7.50% 2. An investor receives a 15% total return by purchasing a stock for $40 and selling it after one year with a 5% capital gain. How much was received in dividend income during the year? A. $2.00 B. $2.20 C. $4.00 D. $6.00 3. Real rates of return are typically less than nominal rates of return due to: A. inflation. B. capital gains. C. dividend payments. D. depreciation. 4. Which of the following guarantees is offered to common stock investors? A. Guaranteed to receive dividends B. Guaranteed to receive capital gains C. Guaranteed only to receive a refund of principal D. No guarantees of any form 5. The risk premium that is offered on common stock is equal to the: A. expected return on the stock. B. real rate of return on the stock. C. excess of expected return over a risk-free return. D. expected return on the S&P 500 index. 6. In a year in which common stocks offered an average return of 18%, Treasury bonds offered 10% and Treasury bills offered 7%, the risk premium for common stocks was: A. 1% B. 3% C. 8% D. 11% 7. The appropriate opportunity cost of capital is the return that investors give up on alternative investments with: A. the same risk. B. the risk-free return. C. the expected return on the S&P 500 index. D. the normal, common stock risk premium.
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8. What is the approximate standard deviation of returns for a one-year project that is equally likely to return 100% as it is to provide a 100% loss? A. 0%
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This note was uploaded on 12/04/2011 for the course FINA 005 taught by Professor Jianshi during the Spring '11 term at UT Arlington.

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hw3 - FINA 3313 Fall 2011 Homework 3 1 This homework is due...

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