1
Marks: 2 Which one of the following is most indicative of a totally efficient stock market?
2
Marks: 2 One year ago, you purchased a stock at a price of $47.50 a share. Today, you sold the stock and realized a total loss of 22.11 percent. Your capital gain was -$12.70 a share. What was your dividend yield?
3
Marks: 2 A stock had returns of 11 percent, -18 percent, -21 percent, 5 percent, and 34 percent over the past five years. What is the standard deviation of these returns?
4
Marks: 2 As long as the inflation rate is positive, the real rate of return on a security will be ____ the nominal rate of return.
5
Marks: 2 A stock had returns of 12 percent, 16 percent, 13 percent, 19 percent, 15 percent, and -6 percent over the last six years. What is the geometric average return on the stock for this period?
6
Marks: 2 Which one of the following categories of securities had the highest average return for the period 1926-2007?
7
Marks: 2 Which one of the following statements best defines the efficient market hypothesis?
8
Marks: 2 Small-company stocks, as the term is used in the textbook, are best defined as the:
9
Marks: 2 Which one of the following categories of securities had the lowest average risk premium for the period 1926-2007?
10
Marks: 2 Calculate the standard deviation of the following rates of return:
Year Return
1 7%
2 25%
3 14%
4 -15%
5 16%
11
Marks: 2 The historical record for the period 1926-2007 supports which one of the following statements?
12
Marks: 2 A stock has a geometric average return of 14.6 percent and an arithmetic average return of 15.5 percent based on the last 33 years. What is the estimated average rate of return for the next 6 years based on Blume's formula?
13
Marks: 2 Which one of the following is defined by its mean and its standard deviation?
14
Marks: 2 Which one of the following statements is correct based on the historical record for the period 1926-2007?
15
Marks: 2 Over a 34-year period an asset had an arithmetic return of 13 percent and a geometric return of 10.5 percent. Using Blume's formula, what is your best estimate of the future annual returns over the next 10 years?
16
Marks: 2 You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 3 percent, -10 percent, 24 percent, 22 percent, and 12 percent. Suppose the average inflation rate over this time period was 3.6 percent and the average T-bill rate was 4.8 percent. Based on this information, what was the average nominal risk premium?
17
Marks: 2 Estimates of the rate of return on a security based on a historical arithmetic average will probably tend to _____ the expected return for the long-term while estimates using the historical geometric average will probably tend to _____ the expected return for the short-term.
18
Marks: 2 A year ago, you purchased 400 shares of Stellar Wood Products, Inc. stock at a price of $8.62 per share. The stock pays an annual dividend of $0.10 per share. Today, you sold all of your shares for $4.80 per share. What is your total dollar return on this investment?
19
Marks: 2 Which of the following statements are true based on the historical record for 1926-2007?
I. Risk and potential reward are inversely related.
II. Risk-free securities produce a positive real rate of return each year.
III. Returns are more predictable over the short-term than they are over the long-term.
IV. Bonds are generally a safer investment than are stocks.
20
Marks: 2 Which one of the following statements correctly applies to the period 1926-2007?
USA 
India