Question 1

Which one of the following has the narrowest distribution of returns for the period 1926-2014?

Accepted Answer

A)  Long-term corporate bonds
B)  Long-term government bonds
C)  Intermediate-term government bonds
D)  Large-company stocks
E)  Small-company stocksF) A) and C)
G) D) and E)

Question 2

Assume that large-company stocks had an average rate of return of 12.1 percent over the past 88 years while T-bills returned an average of 3.5 percent and inflation averaged 3.0 percent.Given this,the real return on large-company stocks was:

Accepted Answer

A)  6.67 percent
B)  5.60 percent
C)  8.83 percent
D)  7.94 percent
E)  9.10 percentF) B) and D)
G) A) and E)

Question 3

Semistrong form market efficiency states that the value of a security is based on:

Accepted Answer

A)  all public and private information.
B)  historical information only.
C)  all publicly available information.
D)  all publicly available information plus any data that can be gathered from insider trading.
E)  random information with no clear distinction as to the source of that information.F) A) and E)
G) B) and C)

Question 4

The Bermuda Triangle Store pays a constant dividend.Last year,the dividend yield was 4.0 percent when the stock was selling for $16 a share.What must the stock price be today if the market currently requires a 4.3 percent dividend yield on this stock?

Accepted Answer

A)  $14.88
B)  $12.30
C)  $15.59
D)  $19.22
E)  $12.48F) A) and E)
G) A) and D)

Question 5

An efficient capital market is best defined as a market in which security prices reflect which one of the following?

Accepted Answer

A)  Current inflation
B)  A risk premium
C)  All available information
D)  The historical arithmetic rate of return
E)  The historical geometric rate of returnF) C) and E)
G) A) and B)

Question 6

Over the last four years,a stock has had an arithmetic average return of 12.8 percent.Three of those four years produced returns of 22.6 percent,15.2 percent,and -24.1 percent,respectively.What is the geometric average return for this four-year period?

Accepted Answer

A)  10.18 percent
B)  8.39 percent
C)  11.67 percent
D)  12.40 percent
E)  12.67 percentF) None of the above
G) A) and E)

Exam 10: Some Lessons From Capital Market History

Semistrong form market efficiency states that the value of a security is based on:

Correct Answer
verified

An efficient capital market is best defined as a market in which security prices reflect which one of the following?

Correct Answer
verified

Assume that large-company stocks had an average rate of return of 12.1 percent over the past 88 years while T-bills returned an average of 3.5 percent and inflation averaged 3.0 percent.Given this,the real return on large-company stocks was:

Correct Answer
verified

The Bermuda Triangle Store pays a constant dividend.Last year,the dividend yield was 4.0 percent when the stock was selling for $16 a share.What must the stock price be today if the market currently requires a 4.3 percent dividend yield on this stock?

Correct Answer
verified

Over the last four years,a stock has had an arithmetic average return of 12.8 percent.Three of those four years produced returns of 22.6 percent,15.2 percent,and -24.1 percent,respectively.What is the geometric average return for this four-year period?

Correct Answer
verified

Which one of the following has the narrowest distribution of returns for the period 1926-2014?

Correct Answer
verified

Exam 10: Some Lessons From Capital Market History

Semistrong form market efficiency states that the value of a security is based on:

Correct AnswerverifiedShow Answer

An efficient capital market is best defined as a market in which security prices reflect which one of the following?

Correct AnswerverifiedShow Answer

Assume that large-company stocks had an average rate of return of 12.1 percent over the past 88 years while T-bills returned an average of 3.5 percent and inflation averaged 3.0 percent.Given this,the real return on large-company stocks was:

Correct AnswerverifiedShow Answer

The Bermuda Triangle Store pays a constant dividend.Last year,the dividend yield was 4.0 percent when the stock was selling for $16 a share.What must the stock price be today if the market currently requires a 4.3 percent dividend yield on this stock?

Correct AnswerverifiedShow Answer

Over the last four years,a stock has had an arithmetic average return of 12.8 percent.Three of those four years produced returns of 22.6 percent,15.2 percent,and -24.1 percent,respectively.What is the geometric average return for this four-year period?

Correct AnswerverifiedShow Answer

Which one of the following has the narrowest distribution of returns for the period 1926-2014?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified