D076 Module 6 Question and answers
100% correct 2025/2026
return - correct answer ✔money gained or lost on an investment over a certain period of time
Holding Period Return - correct answer ✔the return over the entire period that an investor owns a
financial security
expected return - correct answer ✔expectations data to calculate a hypothesized estimate of future
prices or returns
In 1980, the inflation rate was 5% and a particular investment gave a return of 15%. In 2010, the
inflation rate was 5% and the same investment gave a return of 12%. In which year did stockholders gain
greater purchasing power and why? - correct answer ✔1980 because the real rate was higher than in
2010.
In order to compare purchasing power, you have to find the real rates. The real rate is nominal rate
minus inflation. Therefore, the investment gave higher purchasing power in 1980 than in 2010.
What is an expected return? - correct answer ✔A hypothesized estimate of future returns under
different scenarios based on expectational data
market risk - correct answer ✔systematic risk
Nondiversifiable risk
firm-specific risk - correct answer ✔Unsystmatic risk
Diversifiable risk
Idiosyncratic risk
100% correct 2025/2026
return - correct answer ✔money gained or lost on an investment over a certain period of time
Holding Period Return - correct answer ✔the return over the entire period that an investor owns a
financial security
expected return - correct answer ✔expectations data to calculate a hypothesized estimate of future
prices or returns
In 1980, the inflation rate was 5% and a particular investment gave a return of 15%. In 2010, the
inflation rate was 5% and the same investment gave a return of 12%. In which year did stockholders gain
greater purchasing power and why? - correct answer ✔1980 because the real rate was higher than in
2010.
In order to compare purchasing power, you have to find the real rates. The real rate is nominal rate
minus inflation. Therefore, the investment gave higher purchasing power in 1980 than in 2010.
What is an expected return? - correct answer ✔A hypothesized estimate of future returns under
different scenarios based on expectational data
market risk - correct answer ✔systematic risk
Nondiversifiable risk
firm-specific risk - correct answer ✔Unsystmatic risk
Diversifiable risk
Idiosyncratic risk
