Question 1

For a stock that does not pay a dividend, the total return can also be defined as the:

Accepted Answer

A)   Risk premium plus the inflation rate.
B)   Capital gains rate.
C)   Real rate of return.
D)   Financial rate of return.
E)   Nominal after-tax rate of return.F) D) and E)
G) A) and C)

Question 2

Over the last three years you earned 5%, 7%, and 9%. What is the standard deviation of your returns?

Accepted Answer

A)   0.8%
B)   1.6%
C)   2.0%
D)   2.3%
E)   2.9%F) C) and D)
G) D) and E)

Question 3

What percentage of the population is represented within one standard deviation?

Accepted Answer

A)   95%
B)   96%
C)   97%
D)   98%
E)   99%F) A) and B)
G) A) and C)

Question 4

Provide a definition for the concept of normal distribution.

Accepted Answer

A symmetric, bell-shaped frequ...

Question 5

Coming out of the depression, small stocks in the U.S. earned their highest one year historical return of 143% in 1933. However, in the four years prior to that you would have lost (going from 1929 to 1932, in order) about 50%, 40%, 50%, and 5%. Suppose you started into this five year stretch with $10,000 invested. How much did you still have heading into 1933? How much would you have at the end of that year? Based on these numbers, do you think the 143% return should be included in the return series?

Accepted Answer

This question gives students the chance ...

Question 6

Which one of the following statements is correct concerning market efficiency?

Accepted Answer

A)   Real asset markets are more efficient than financial markets.
B)   If a market is efficient, arbitrage opportunities should be common.
C)   In an efficient market, some market participants will have an advantage over others.
D)   A firm will generally receive a fair price when it sells shares of stock.
E)   New information will gradually be reflected in a stock's price to avoid any sudden change in the price of the stock.F) None of the above
G) A) and B)

Question 7

An asset's return on investment has two components, one of which is ____________, which reflects the cash you receive directly while you own the investment.

Accepted Answer

A)   the capital gain
B)   the income component
C)   your reward for bearing risk
D)   your total dollar return
E)   your gross return on that investmentF) B) and C)
G) B) and E)

Question 8

The dividend yield is computed as the annual dividend in year t + 1 divided by the:

Accepted Answer

A)   Annual dividend in year t.
B)   Market value in year t.
C)   Market value in year t + 1.
D)   Average value in year t.
E)   Average value in year t + 1.F) B) and C)
G) A) and E)

Question 9

Which of the following is NOT correct about market efficiency?

Accepted Answer

A)   The EMH says that actual capital markets, such as the TSX, are efficient.
B)   Strong form efficiency says all information of any kind is reflected in stock prices.
C)   Semi-strong form efficiency says all public and private information is reflected in stock prices.
D)   Weak form efficiency says studying past prices in an attempt to identify mispriced stocks is futile.
E)   The price a firm obtains when it sells its stock in an efficient market is a fair price, in the sense that the price reflects available information about the stock.F) C) and E)
G) A) and B)

Question 10

The risk-free rate of return is based on the long-term government bond rate.

Accepted Answer

A) True 
 B)False

Question 11

Suppose you have $30,000 invested in the stock market and your banker comes to you and tries to get you to move that money into the bank's GICs. He explains that the GICs are 100% Government insured and that you are taking unnecessary risks by being in the stock market. How would you respond?

Accepted Answer

The usual response is that bank GICs typ...

Question 12

You purchased 300 shares of stock at a price of $35.86 per share. Over the last year, you have received total dividend income of $336. What is the dividend yield?

Accepted Answer

A)   1.1%
B)   3.1%
C)   6.8%
D)   9.4%
E)   10.7%F) B) and D)
G) B) and C)

Question 13

The higher the standard deviation, the less predictable the rate of return in any one year.

Accepted Answer

A) True 
 B)False

Question 14

Market prices continually fluctuating reinforces the argument that the financial markets are efficient.

Accepted Answer

A) True 
 B)False

Question 15

A strong form of market efficiency is considered to hold in well-organized markets.

Accepted Answer

A) True 
 B)False

Question 16

You discover you can make above normal returns if you buy oil-company stocks just before noon on any given trading day and then sell them immediately before the market closes that same day. Which of the following describes this event?

Accepted Answer

A)   This would not be a violation of market efficiency.
B)   This would be a violation of weak form efficiency.
C)   This would be a violation of semi-strong form efficiency.
D)   This would be a violation of strong form efficiency.
E)   This would be a violation of all forms of market efficiency.F) C) and D)
G) A) and D)

Question 17

Eight months ago, Turner purchased 100 shares of Delta Frames stock at a price of $47.08 a share. Delta pays a quarterly dividend of $1.10 a share. Today, Turner sold all of his shares for $48.63 per share. What is Turner's total capital gain on this investment?

Accepted Answer

A)   $155
B)   $180
C)   $265
D)   $360
E)   $375F) D) and E)
G) B) and D)

Question 18

The standard deviation is a measure of volatility.

Accepted Answer

A) True 
 B)False

Question 19

Nine months ago, you purchased 350 shares of Southland, Inc. stock at a price of $62.47 a share. The company pays quarterly dividends of $.85 a share. Today, you sold all of your shares for $67.82 a share. What is your total percentage return on this investment?

Accepted Answer

A)   9.93%
B)   10.08%
C)   11.29%
D)   12.65%
E)   13.33%F) All of the above
G) A) and B)

Question 20

If a market has semi-strong efficiency, then all insider information is included in market prices.

Accepted Answer

A) True 
 B)False

Exam 12: Lessons From Capital Market History

Eight months ago, Turner purchased 100 shares of Delta Frames stock at a price of $47.08 a share. Delta pays a quarterly dividend of $1.10 a share. Today, Turner sold all of his shares for $48.63 per share. What is Turner's total capital gain on this investment?

Correct Answer
verified

You purchased 300 shares of stock at a price of $35.86 per share. Over the last year, you have received total dividend income of $336. What is the dividend yield?

Correct Answer
verified

Nine months ago, you purchased 350 shares of Southland, Inc. stock at a price of $62.47 a share. The company pays quarterly dividends of $.85 a share. Today, you sold all of your shares for $67.82 a share. What is your total percentage return on this investment?

Correct Answer
verified

Which of the following is NOT correct about market efficiency?

Correct Answer
verified

Provide a definition for the concept of normal distribution.

Correct Answer
verified
A symmetric, bell-shaped frequ...
View Answer

Correct Answer
verified
This question gives students the chance ...
View Answer

Market prices continually fluctuating reinforces the argument that the financial markets are efficient.

Correct Answer
verified

What percentage of the population is represented within one standard deviation?

Correct Answer
verified

Suppose you have $30,000 invested in the stock market and your banker comes to you and tries to get you to move that money into the bank's GICs. He explains that the GICs are 100% Government insured and that you are taking unnecessary risks by being in the stock market. How would you respond?

Correct Answer
verified
The usual response is that bank GICs typ...
View Answer

A strong form of market efficiency is considered to hold in well-organized markets.

Correct Answer
verified

If a market has semi-strong efficiency, then all insider information is included in market prices.

Correct Answer
verified

The risk-free rate of return is based on the long-term government bond rate.

Correct Answer
verified

The higher the standard deviation, the less predictable the rate of return in any one year.

Correct Answer
verified

The standard deviation is a measure of volatility.

Correct Answer
verified

An asset's return on investment has two components, one of which is ____________, which reflects the cash you receive directly while you own the investment.

Correct Answer
verified

You discover you can make above normal returns if you buy oil-company stocks just before noon on any given trading day and then sell them immediately before the market closes that same day. Which of the following describes this event?

Correct Answer
verified

Which one of the following statements is correct concerning market efficiency?

Correct Answer
verified

For a stock that does not pay a dividend, the total return can also be defined as the:

Correct Answer
verified

Over the last three years you earned 5%, 7%, and 9%. What is the standard deviation of your returns?

Correct Answer
verified

The dividend yield is computed as the annual dividend in year t + 1 divided by the:

Correct Answer
verified

Exam 12: Lessons From Capital Market History

Eight months ago, Turner purchased 100 shares of Delta Frames stock at a price of $47.08 a share. Delta pays a quarterly dividend of $1.10 a share. Today, Turner sold all of his shares for $48.63 per share. What is Turner's total capital gain on this investment?

Correct AnswerverifiedShow Answer

You purchased 300 shares of stock at a price of $35.86 per share. Over the last year, you have received total dividend income of $336. What is the dividend yield?

Correct AnswerverifiedShow Answer

Nine months ago, you purchased 350 shares of Southland, Inc. stock at a price of $62.47 a share. The company pays quarterly dividends of $.85 a share. Today, you sold all of your shares for $67.82 a share. What is your total percentage return on this investment?

Correct AnswerverifiedShow Answer

Which of the following is NOT correct about market efficiency?

Correct AnswerverifiedShow Answer

Provide a definition for the concept of normal distribution.

Correct AnswerverifiedA symmetric, bell-shaped frequ...View AnswerShow Answer

Correct AnswerverifiedThis question gives students the chance ...View AnswerShow Answer

Market prices continually fluctuating reinforces the argument that the financial markets are efficient.

Correct AnswerverifiedShow Answer

What percentage of the population is represented within one standard deviation?

Correct AnswerverifiedShow Answer

Suppose you have $30,000 invested in the stock market and your banker comes to you and tries to get you to move that money into the bank's GICs. He explains that the GICs are 100% Government insured and that you are taking unnecessary risks by being in the stock market. How would you respond?

Correct AnswerverifiedThe usual response is that bank GICs typ...View AnswerShow Answer

A strong form of market efficiency is considered to hold in well-organized markets.

Correct AnswerverifiedShow Answer

If a market has semi-strong efficiency, then all insider information is included in market prices.

Correct AnswerverifiedShow Answer

The risk-free rate of return is based on the long-term government bond rate.

Correct AnswerverifiedShow Answer

The higher the standard deviation, the less predictable the rate of return in any one year.

Correct AnswerverifiedShow Answer

The standard deviation is a measure of volatility.

Correct AnswerverifiedShow Answer

An asset's return on investment has two components, one of which is ____________, which reflects the cash you receive directly while you own the investment.

Correct AnswerverifiedShow Answer

You discover you can make above normal returns if you buy oil-company stocks just before noon on any given trading day and then sell them immediately before the market closes that same day. Which of the following describes this event?

Correct AnswerverifiedShow Answer

Which one of the following statements is correct concerning market efficiency?

Correct AnswerverifiedShow Answer

For a stock that does not pay a dividend, the total return can also be defined as the:

Correct AnswerverifiedShow Answer

Over the last three years you earned 5%, 7%, and 9%. What is the standard deviation of your returns?

Correct AnswerverifiedShow Answer

The dividend yield is computed as the annual dividend in year t + 1 divided by the:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
verified
A symmetric, bell-shaped frequ...
View Answer

Correct Answer
verified
This question gives students the chance ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The usual response is that bank GICs typ...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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