FIN 501 CHAPTER 4, 5, 6 (LATEST UPDATE) REAL
QUESTIONS AND VERIFIED ANSWERS |100% CORRECT |
ALREADY GRADED A
capital loss is computed by
A) subtracting the original cost of an investment from the proceeds
received from the sale of that investment minus any income from the
investment.
B) subtracting the original cost of an investment from the proceeds
received from the sale of that investment plus any income from the
investment.
C) subtracting the proceeds received from the sale of an investment from
the original cost of the investment.
D) subtracting the original cost of an investment from the proceeds
received from the sale of that investment. Ans✓✓✓D
Rational investor's are motivated to purchase an asset because of its
A) expected returns.
B) past returns.
C) emotional benefits.
D) all of the above. Ans✓✓✓A
The most predictable component of stock returns is
A) capital gains.
B) capital losses.
C) inflation adjusted return.
,D) dividend income. Ans✓✓✓D
Kelly bought a stock at a price of $22.50. She received a $1.75 dividend
and sold the stock for $24.75. What is Kelly's capital gain on this
investment?
A) $4.00
B) $3.75
C) $2.25
D) $1.75 Ans✓✓✓C
Ashley purchased a stock at a price of $27 a share. She received
quarterly dividends of $0.75 per share. After one year, Ashley sold the
stock at a price of $29.25 a share. What is her percentage holding period
return on this investment?
A) 10.3%
B) 11.1%
C) 17.9%
D) 19.4% Ans✓✓✓D
Inflation tends to have a particularly negative impact on the price of
A) real estate.
B) bonds.
C) gold.
D) crude oil. Ans✓✓✓B
,Historically, what is the correct ranking of the following securities from
lowest rate of return to the
highest?
A) Short-term government bills, long-term government bonds, stocks.
B) Long-term government bonds, short-term government bills, stocks.
C) Stocks, short-term government bills, long-term government bonds.
D) Historical returns do not exhibit a consistent pattern. Ans✓✓✓A
Which of the following internal characteristics should cause investors to
expect the highest rate of return?
A) a steady record of past dividends
B) interest and principal guaranteed by the U.S. government
C) a record of excellent management and consistent dividend payments
D) poor management and excessive use of debt financing Ans✓✓✓D
Which of the following investments may be impacted by government
actions?
A) stocks
B) corporate bonds
C) government bonds
D) all of the above Ans✓✓✓D
, Over the long term, which one of the following has historically had the
lowest risk and lowest average annual rate of return?
A) common stock
B) long-term government bonds
C) real-estate
D) corporate bonds Ans✓✓✓B
The time value of money concept best supports the idea of
A) the sooner the better.
B) better late than never.
C) a bird in hand is worth two in the bush.
D) good things come to those who wait. Ans✓✓✓A
The present value of $10,000 discounted at 5% per year and received at
the end of 5 years is
A) $10,000/1.25.
B) $10,000(1.05)5.
C) $10,000/(1.05)5.
D) $10,000 (1.05)1/5. Ans✓✓✓C
Bob's house has doubled in value since he bought it 30 years ago. The
house's value has increased by an annual rate of
A) 2.34%.
B) 3.33%.
QUESTIONS AND VERIFIED ANSWERS |100% CORRECT |
ALREADY GRADED A
capital loss is computed by
A) subtracting the original cost of an investment from the proceeds
received from the sale of that investment minus any income from the
investment.
B) subtracting the original cost of an investment from the proceeds
received from the sale of that investment plus any income from the
investment.
C) subtracting the proceeds received from the sale of an investment from
the original cost of the investment.
D) subtracting the original cost of an investment from the proceeds
received from the sale of that investment. Ans✓✓✓D
Rational investor's are motivated to purchase an asset because of its
A) expected returns.
B) past returns.
C) emotional benefits.
D) all of the above. Ans✓✓✓A
The most predictable component of stock returns is
A) capital gains.
B) capital losses.
C) inflation adjusted return.
,D) dividend income. Ans✓✓✓D
Kelly bought a stock at a price of $22.50. She received a $1.75 dividend
and sold the stock for $24.75. What is Kelly's capital gain on this
investment?
A) $4.00
B) $3.75
C) $2.25
D) $1.75 Ans✓✓✓C
Ashley purchased a stock at a price of $27 a share. She received
quarterly dividends of $0.75 per share. After one year, Ashley sold the
stock at a price of $29.25 a share. What is her percentage holding period
return on this investment?
A) 10.3%
B) 11.1%
C) 17.9%
D) 19.4% Ans✓✓✓D
Inflation tends to have a particularly negative impact on the price of
A) real estate.
B) bonds.
C) gold.
D) crude oil. Ans✓✓✓B
,Historically, what is the correct ranking of the following securities from
lowest rate of return to the
highest?
A) Short-term government bills, long-term government bonds, stocks.
B) Long-term government bonds, short-term government bills, stocks.
C) Stocks, short-term government bills, long-term government bonds.
D) Historical returns do not exhibit a consistent pattern. Ans✓✓✓A
Which of the following internal characteristics should cause investors to
expect the highest rate of return?
A) a steady record of past dividends
B) interest and principal guaranteed by the U.S. government
C) a record of excellent management and consistent dividend payments
D) poor management and excessive use of debt financing Ans✓✓✓D
Which of the following investments may be impacted by government
actions?
A) stocks
B) corporate bonds
C) government bonds
D) all of the above Ans✓✓✓D
, Over the long term, which one of the following has historically had the
lowest risk and lowest average annual rate of return?
A) common stock
B) long-term government bonds
C) real-estate
D) corporate bonds Ans✓✓✓B
The time value of money concept best supports the idea of
A) the sooner the better.
B) better late than never.
C) a bird in hand is worth two in the bush.
D) good things come to those who wait. Ans✓✓✓A
The present value of $10,000 discounted at 5% per year and received at
the end of 5 years is
A) $10,000/1.25.
B) $10,000(1.05)5.
C) $10,000/(1.05)5.
D) $10,000 (1.05)1/5. Ans✓✓✓C
Bob's house has doubled in value since he bought it 30 years ago. The
house's value has increased by an annual rate of
A) 2.34%.
B) 3.33%.
