FIN 370T Wk 4 – Practice: Ch. 9, 10, and 11 Knowledge Check

Click Here To Download Your Files :

https://hwsell.com/category/fin-370/

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

You can buy more tutorials from the below link

https://www.hwsell.com/

FIN 370T Wk 4 – Practice: Ch. 9, 10, and 11 Knowledge Check

Which of these statements is true?

Multiple Choice

•      When people purchase a stock, they know exactly what their dollar and percent return are going to be.
•      Many people purchase stocks as they find comfort in the certainty for this safe form of investing.
•      When people purchase a stock, they know the short-term return, but not the long-term return.
•      When people purchase a stock, they do not know what their return is going to be-either short term or in the long run.

MedTech Corp. stock was $50.95 per share at the end of last year. Since then, it paid a $0.45 per share dividend. The stock price is currently $62.50. If you owned 500 shares of MedTech, what was your percent return?

Multiple Choice

•      7.20 percent
•      8.83 percent
•      22.67 percent
•      23.55 percent

Rank the following three stocks by their risk-return relationship, best to worst. Night Ryder has an average return of 33 percent and standard deviation of 40 percent. The average return and standard deviation of WholeMart are 10 percent and 20 percent; and of Fruit Fly are 19 percent and 33 percent.

Multiple Choice

•      Night Ryder, WholeMart, Fruit Fly
•      WholeMart, Fruit Fly, Night Ryder
•      Night Ryder, Fruit Fly, WholeMart
•      Fruit Fly, Whole Mart, Night Ryder

Which of these is a measure of risk to reward earned by an investment over a specific period of time?

Multiple Choice

•      Coefficient of variation
•      Market deviation
•      Standard deviation
•      Total variation

Rank the following three stocks by their risk-return relationship, best to worst. Rail Haul has an average return of 10 percent and standard deviation of 19 percent. The average return and standard deviation of Idol Staff are 12 percent and 22 percent; and of Poker-R-Us are 11 percent and 25 percent.

Multiple Choice

•      Idol Staff, Rail Haul, Poker-R-Us
•      Rail Haul, Idol Staff, Poker-R-Us
•      Idol Staff, Poker-R-Us, Rail Haul
•      Poker-R-Us, Rail Haul, Idol Staff

Consider the following correlations:

      IBMApple      Disney

IBM1.0         

Apple      -2    1    

Disney    0.3   -7    1

________________________________________

Given this data, which of the following is most preferable if an investor can only select one pair of companies?

Multiple Choice

•      Apple and IBM
•      Disney and IBM
•      Disney and Apple
•      It does not matter which two are selected-there is no preference order.

Which of the following is the concept and procedure for combining securities into a portfolio to minimize risk?

Multiple Choice

•      Firm specific theory
•      Modern portfolio theory
•      Optimal portfolio theory
•      Total portfolio theory

Determine which one of these three portfolios dominates another. Name the dominated portfolio and the portfolio that dominates it. Portfolio Blue has an expected return of 7 percent and risk of 10 percent. The expected return and risk of portfolio Yellow are 13 percent and 10 percent, and for the Purple portfolio are 9 percent and 14 percent.

Multiple Choice

•      Portfolio Blue dominates portfolio Yellow
•      Portfolio Yellow dominates portfolio Blue
•      Portfolio Purple dominates portfolio Blue
•      Portfolio Purple dominates portfolio Yellow

Which of the following is a model that includes an equation that relates a stock's required return to an appropriate risk premium?

Multiple Choice

•      Asset pricing
•      Behavioral finance
•      Beta
•      Efficient markets