Ch 10- FIN4443
If you buy 40 shares of BP stock at $35 per share, your total investment in BP is Blank______. Multiple choice question. $1,400 $1,350 $1,540 $1,450
$1,400 40 × $35 = $1,400.
If you receive a $2 dividend per share on your 100 shares, your total dividend income is Blank______. Multiple choice question. $100 $20 $10 $200
$2 × 100 = $200.
Dividends are the ______ component of the total return from investing in a stock. Multiple choice question. income price appreciation capital gains amortization
income
The excess return on a risky asset is the difference between the risky return and the Blank______ rate. Multiple choice question. inflation prime federal funds risk-free
risk-free
A frequency distribution of stock returns displays ______. Multiple select question. various ranges of returns on the horizontal axis the standard deviation of all data points the frequency of occurrence for each rate of return range the average of all data points
various ranges of returns on the horizontal axis the frequency of occurrence for each rate of return range
What will your capital gain be if you hold 40 shares of BP stock and the stock price rises from $27 to $40 a share? Multiple choice question. $650 $1,600 $980 $520
$520 ($40 − 27) x 40 = $520.
What is the maximum capital loss that you can incur if you bought 200 shares of TP Inc. for $32? Multiple choice question. $6,400 unlimited $1,600 $3,200
$6,400 200 x $32= 6400
If stock GHI has an initial price of $100. Two years later, the price is $132. What is GHI's geometric mean rate of return? Multiple choice question. 14.89% 15.00% 17.69% 13.32%
($132/$100)1/2 − 1 = 14.89%.
The Ibbotson SBBI small stock portfolio includes the bottom _________ of NYSE listed stocks. Multiple choice question. 10% 50% 1% 20%
20%
The Ibbotson SBBI small stock portfolio includes the bottom 20% of ______ listed stocks. Multiple choice question. AMEX NYSE NASDAQ
NYSE
The mean return and the standard deviation of returns can be used to describe the distribution of stock ________
Returns
The Ibbotson SBBI data shows that ___. Multiple select question. inflation was always higher than the U.S. T-bill yield T-bills had the lowest risk or variability long-term corporate bonds had less risk or variability than stocks large-company stocks had higher returns than small-company stocks
T-bills had the lowest risk or variability long-term corporate bonds had less risk or variability than stocks
The dividend yield for a 1-year period is equal to the annual dividend amount divided by the Blank______. Multiple choice question. ending stock price beginning stock price average of the beginning and ending stock prices
beginning stock price
The total dollar return is the sum of dividends and ______. Multiple choice question. government payouts percentage returns overall market fluctuations capital gains or losses
capital gains or losses Total dollar return = dividend income + capital gain or loss.
The Ibbotson SBBI data presents rates of return from 1948 through recent times for ___. Multiple select question. long-term corporate bonds inflation U.S. commercial paper preferred stocks long-term U.S. government bonds
long-term corporate bonds inflation long-term U.S. government bonds
The Ibbotson SBBI data shows that over the long-term, Blank______. Multiple select question. large-company stocks generated the highest average return long-term corporate bonds had the lowest risk small-company stocks had the highest risk level small-company stocks generated the highest average return T-bills, which had the lowest risk, generated the lowest return.
small-company stocks had the highest risk level small-company stocks generated the highest average return T-bills, which had the lowest risk, generated the lowest return.
