Quiz 5 Fin 3000

% of salary you should save for retirement

10

default plan for federal student loans

10 years

% of americans who could pass financial literacy test

37

liable to $__ if credit card stolen

50

college grad salaries are ___% more than non college grads

56

federal student loans deferred for ___ months

6

% of students that feel financially stressed

80

The return earned in an average year over a multiyear period is called the _____ average return.

Arithmetic

You own a stock that you think will produce a return of 11 percent in a good economy and 3 percent in a poor economy. Given the probabilities of each state of the economy occurring, you anticipate that your stock will earn 6.5 percent next year. Which one of the following terms applies to this 6.5 percent?

Expected return

The average compound return earned per year over a multiyear period is called the _____ average return.

Geometric

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.

Which one of the following correctly describes the dividend yield?

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

Suzie owns five different bonds valued at $36,000 and twelve different stocks valued at $82,500 total. Which one of the following terms most applies to Suzie's investments?

Portfolio

The principle of diversification tells us that:

Spreading an investment across many diverse assets will eliminate some of the total risk

Which one of the following best defines the variance of an investment's annual returns over a number of years?

The average squared difference between the actual returns and the arithmetic average return.`

A news flash just appeared that caused about a dozen stocks to suddenly drop in value by 20 percent. What type of risk does this news flash best represent?

Unsystematic

Standard deviation is a measure of which one of the following?

Volatility

The geometric average return answers the question,

What was your average compounded return per year over a particular period?

mint

budgeting app

The arithmetic average tells you what you actually earned per year on average, whereas the geometric average tells you what you earned in a typical year.

false

free credit score website

freecreditkarma

acorn app

invests spare change into the stock market

According to the video, short-run projected wealth levels calculated using geometric averages are probably ______________

pessimistic

Expected return is the return on a _______ asset expected in the future.

risky