The excess return required from a risky asset over that required from a risk-free asset is called the:
variance.
excess return.
geometric premium.
average return.
risk premium.
You bought 100 shares of stock at $20 each. At the end of the year, you received a total of $400 in dividends, and your stock was worth $2,500 total. What was your total return?
20%
45%
50%
90%
None of the above
The risk premium is computed by ______ the average return for the investment.
adding the inflation rate to
subtracting the average return on the U.S. Treasury bill from
subtracting the average return on long-term government bonds from
subtracting the inflation rate from
adding the average return on the U.S. Treasury bill to
Which of the following statements are correct concerning the variance of the annual returns on an investment?
I. The larger the variance, the more the actual returns tend to differ from the average return.
II. The larger the variance, the larger the standard deviation.
III. The larger the variance, the greater the risk of the investment.
IV. The larger the variance, the higher the expected return.
I, II, III, and IV
I, III, and IV only
II, III, and IV only
I and III only
I, II, and III only
The capital gains yield plus the dividend yield on a security is called the:
current yield.
total return.
variance of returns.
geometric return.
average period return.
Which one of the following is a correct ranking of securities based on their volatility over the period of 1926 to 2008? Rank from highest to lowest.
large company stocks, U.S. Treasury bills, long-term government bonds
small company stocks, long-term corporate bonds, large company stocks
long-term corporate bonds, large company stocks, U.S. Treasury bills
small company stocks, large company stocks, long-term corporate bonds
long-term government bonds, long-term corporate bonds, small company stocks
The average squared difference between the actual return and the average return is called the:
variance.
risk premium.
excess return.
volatility return.
standard deviation.
Capital market history shows us that the average return relationship from lowest to highest between securities is:
There is no ordering.
Treasury bills, government bonds, corporate bonds, large common stocks, small company stocks.
Treasury bills, corporate bonds, government bonds, large common stocks, small company stocks.
Inflation, corporate bonds, Treasuries, small company stocks, large company stocks.
Treasury bills, inflation, small company stocks, large company stocks.
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