FIN 300 Final Ch 12
What is the amount of the risk premium on a U.S. Treasury bill if the risk-free rate is 2.8 percent and the market rate of return is 8.35 percent?
0
Assume all stock prices fairly reflect all of the available information on those stocks. Which on of the following terms best defines the stock market under these conditions?
Efficient capital market
Which one of the following statements related to market efficiency tends to be supported by current evidence?
Markets tend to respond quickly to new information.
The historical record for the period 1926-2013 supports which one of the following statements?
Small-company stocks have lost as much as 50 percent and gained as much as 100 percent in a single year.
The excess return is computed as the
return on a risky security minus the risk-free rate
One year ago, you purchased a stock at a price of $32.15. The stock pays quarterly dividends of $.20 per share. Today, the stock is selling for $33.09 per share. What is your capital gain on this investment?
$.94
Bayside Marina just announced it is decreasing its annual dividend from $1.64 per share to $1.50 per share effective immediately. If the dividend yield remains at its pre-announcement level, then you know the stock price:
Decreased proportionately with the dividend decrease
The average compound return earned per year over a multiyear period is called the _____ average return.
Geometric
Which one of the following categories of securities had the lowest average risk premium for the period 1926-2013?
US treasury bills
As long as the inflation rate is positive, the real rate of return on a security will be ____ the nominal rate of return.
less than
Assume the returns from an asset are normally distributed. The average annual return for the asset is 18.1 percent and the standard deviation of the returns is 32.5 percent. What is the approximate probability that your money will triple in value in a single year?
less than .5 percent
Individual investors who continually monitor the financial markets seeking mispriced securities:
make the market increasingly more efficient
individual investors who continually monitor the financial markets seeking misplaced securities
make the markets increasingly more efficient
Stacy purchased a stock last year and sold it today for $3 a share more than her purchase price. She received a total of $.75 in dividends. Which one of the following statements is correct in relation to this investment?
the capital gain yield is positive
Standard deviation is a measure of which of the following?
volatility