Fundamentals of Investments Valuation and.pdf

1) The total dollar return on a share of stock is defined as the: A) change in the price of the stock over a period. B) dividend income divided by the beginning price per share. C) capital gain or loss plus any dividend income. D) change in the stock price divided by the original stock price. E) annual dividend income received. Question Details Difficulty : 1 Easy Section : 1.1 Returns Topic : Stock returns and yields Learning Objective : 01-01 How to calculate the return on an investment using different methods. Bloom's : Remember Accessibility : Keyboard Navigation Accessibility : Screen Reader Compatible Gradable : automatic 2) The dividend yield is defined as the annual dividend expressed as a percentage of the: A) average stock price. B) initial stock price. C) ending stock price. D) total annual return. E) capital gain. Question Details Difficulty : 1 Easy Section : 1.1 Returns Topic : Stock returns and yields Learning Objective : 01-01 How to calculate the return on an investment using different methods. Bloom's : Remember Accessibility : Keyboard Navigation Accessibility : Screen Reader Compatible Gradable : automatic Version 1 3 3) The capital gains yield is equal to: A) (Pt − Pt + 1 + Dt + 1)/ Pt + 1. B) (Pt + 1 − Pt + Dt)/Pt. C) Dt + 1/Pt. D) (Pt + 1 − Pt)/Pt. E) (Pt + 1 − Pt)/Pt + 1. Question Details Difficulty : 1 Easy Section : 1.1 Returns Topic : Stock returns and yields Learning Objective : 01-01 How to calculate the return on an investment using different methods. Bloom's : Remember Accessibility : Keyboard Navigation Accessibility : Screen Reader Compatible Gradable : automatic 4) When the total return on an investment is expressed on a per-year basis it is called the: A) capital gains yield. B) dividend yield. C) holding period return. D) effective annual return. E) initial return. Version 1 4 Question Details Difficulty : 1 Easy Section : 1.1 Returns Learning Objective : 01-01 How to calculate the return on an investment using different methods. Bloom's : Remember Accessibility : Keyboard Navigation Accessibility : Screen Reader Compatible Gradable : automatic Topic : Annual, holding period, and effective rates 5) The risk-free rate is: A) another term for the dividend yield. B) defined as the increase in the value of a share of stock over time. C) the rate of return earned on an investment in a firm that you personally own. D) defined as the total of the capital gains yield plus the dividend yield. E) the rate of return on a riskless investment. Question Details Difficulty : 1 Easy Learning Objective : 01-01 How to calculate the return on an investment using different methods. Bloom's : Remember Accessibility : Keyboard Navigation Accessibility : Screen Reader Compatible Gradable : automatic Section : 1.3 Average Returns: The First Lesson Topic : Risk and return relationship 6) The rate of return earned on a U.S. Treasury bill is frequently used as a proxy for the: A) risk premium. B) deflated rate of return. C) risk-free rate. D) expected rate of return. E) market rate of return. Version 1 5 Question Details Difficulty : 1 Easy Learning Objective : 01-01 How to calculate the return on an investment using different methods. Bloom's : Remember Accessibility : Keyboard Navigation Accessibility : Screen Reader Compatible Gradable : automatic Section : 1.3 Average Returns: The First Lesson Topic : Risk and return relationship 7) The risk premium is defined as the rate of return on: A) a risky asset minus the risk-free rate. B) the overall market. C) a U.S. Treasury bill. D) a risky asset minus the inflation rate. E) a riskless investment. Question Details Difficulty : 1 Easy Bloom's : Remember Accessibility : Keyboard Navigation Accessibility : Screen Reader Compatible Gradable : automatic Section : 1.3 Average Returns: The First Lesson Topic : Risk premiums Learning Objective : 01-03 The historical risks on various important types of investments. 8) The additional return earned for accepting risk is called the: A) inflated return. B) capital gains yield. C) real return. D) riskless rate. E) risk premium. Version 1 6 Question Details Difficulty : 1 Easy Bloom's : Remember Accessibility : Keyboard Navigation Accessibility : Screen Reader Compatible Gradable : automatic Section : 1.3 Average Returns: The First Lesson Topic : Risk premiums Learning Objective : 01-03 The historical risks on various important types of investments. 9) The standard deviation is a measure of: A) volatility. B) total return. C) capital gains. D) changes in dividend yields. E) changes in the capital gains rate. Question Details Difficulty : 1 Easy Bloom's : Remember Accessibility : Keyboard Navigation Accessibility : Screen Reader Compatible Gradable : automatic Learning Objective : 01-03 The historical risks on various important types of investments. Section : 1.4 Return Variability: The Second Lesson Topic : Standard deviation and variance 10) A frequency distribution, which is completely defined by its average (mean) and variance or standard deviation, is referred to as a(n): Version 1 7 A) normal distribution. B) variance distribution. C) expected rate of return. D) average geometric return. E) average arithmetic return. Question Details Difficulty : 1 Easy Bloom's : Remember Accessibility : Keyboard Navigation Accessibility : Screen Reader Compatible Gradable : automatic Learning Objective : 01-03 The historical risks on various important types of investments. Section : 1.4 Return Variability: The Second Lesson Topic : Normal probability distribution Answer Key Test name: Chapter 01 1) C 2) B 3) D 4) D 5) E 6) C 7) A 8) E 9) A 10) A