CHAPTER 1 QUIZ 63 TO 67
63. What is the rate of return on a share of common stock that increased in value from $40 to $50?
A. 5%
B. 10%
C. 20%
D. 25%
E. None of the above
64. What would be the rate of return for a stock that increased in value from $60 per share to $63 per share and paid a $3 dividend?
A. 12%
B. 11%
C. 10%
D. 1.5%
E. 5%
65. An investment in common stock carries a higher return than a bank certificate of deposit. The difference in returns is called:
A. the risk-free rate.
B. the real rate of return.
C. the risk premium.
D. the beta.
E. None of the above
66. What are the components in determining the real rate of return?
A. The risk premium
B. The inflation factor
C. The required rate of return
D. Both a) and b) above
E. None of the above
67. What is the risk-free rate in an environment where the real rate is 3% and inflation is running at 3%? Use either method found in chapter one.
A. 14.5% or just 14%
B. 10.21% or just 10%
C. 6.09% or just 6%
D. 9.09% or just 9%
E. 0%
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