FIN 3000 Concepts to Know

Pataasin ang iyong marka sa homework at exams ngayon gamit ang Quizwiz!

Which one of the following categories of securities has the most volatile annual returns over the period 1926-2019

- Long-term corp bonds - Large-company stocks - Intermediate term government bonds - US treasury bills - small company stocks

To convince investors to accept greater volatility, you must

- decrease the risk premium - increase the risk premium - decrease the real return - decrease the risk free rate - increase the risk free rate

Based on the period 1926-2019, the actual real return on large-company stocks has been around - 9% - 10% - 6% - 7% - 8%

9 percent

Which of the following yields on a stock can be negative? - Dividend yield - Capital gains yield - Capital gains yield and total return - Dividend yield, capital gains yield, and total return Dividend yield and total return

Capital gains yield and total return

Which one of the following correctly describes the dividend yield? - Next year's annual dividend divided by today's stock price - This year's annual dividend divided by today's stock price - This year's annual dividend divided by next year's stock price - Next year's annual dividend divided by this year's annual dividend - The increase in next year's dividend over this year's dividend by this year's dividend

Next year's dividend divided by today's stock price

Assume that last year T-bills returned 2.2 percent while your investment in large-company stocks earned an average of 9.1 percent. Which one of the following items refers to the difference between these two rates of return - Risk premium - Geometric average return - The arithmetic average return - Standard deviation - Varience

Risk premium

Which one of the following categories of securities has the highest average annual return for the period 1926-2019 - U.S. Treasury bills - Large-company stocks - Small-company stocks - Long-term corporates bonds - Long-term government bonds

Small-company stocks

Which one of the following earned the highest risk premium over the period 1926-2019 - Long-term corporate bonds - US treasury bills - Small-company stocks - Large company stocks - Long term gov bonds

Small-company stocks

The historical record for the period 1926-2019 supports which one of the following statements - When large-company stocks have a negative return, they will have a negative return for at least two consecutive years. - The return on U.S. Treasury bills exceeds the inflation rate by at least .5 percent each year. - There was only one year during the period when double-digit inflation occurred. - Small-company stocks have lost as much as 50 percent and gained as much as 100 percent in a single year. - The inflation rate was positive each year throughout the period.

Small-company stocks have lost as much as 50% and gained as much as 100% in a single year


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