FIN 341 OSU QUESTIONS AND ANSWERS
capital gain - Answers -dollar value of the stock minus the price you paid for it
total dollar return - Answers -the return on an investmnet measured in dollars,
accounting for all interim cash flow and capital gains or losses
total percent return - Answers -the return on an investment measured as a percentage
of the original investment. the total percent return is the return for each dollar invested
dividend yield - Answers -the amount of dividend in percentage that wed receive if we
invested one dollar
holding period return - Answers -the return that you earn for the period you hold the
stock
EAR - Answers -effective annual return is the return that is annualized. if you hold a
stock for one year then the holding period return is the same as the EAR
volatility - Answers -way to measure the spread of returns i.e the risk of the asset
classes. volatility is defined as the standard deviation of returns which is the square root
of the variance of the returns
systematic risk - Answers -market/non diversifiable risk = affects all companies int he
economy
systemic risk - Answers -risk that underlying system of economy will fail
Liquidity risk - Answers -undertaintly in assets and the liquidity of it
idiosyncratic risk - Answers -diversifiable risk specific to companies or assets
counter party risk - Answers -risk of not upholding the deal on the contract
credit risk - Answers -risk of defaulting an obligation
country risk - Answers -risk that will affect the country
political risk - Answers -subset of country risk uncertainty in political economy
inflation risk - Answers -prices ^ uncertainty of future inflation
interest rate risk - Answers -
realized returns - Answers -returns that actually happened, they are historical in nature
capital gain - Answers -dollar value of the stock minus the price you paid for it
total dollar return - Answers -the return on an investmnet measured in dollars,
accounting for all interim cash flow and capital gains or losses
total percent return - Answers -the return on an investment measured as a percentage
of the original investment. the total percent return is the return for each dollar invested
dividend yield - Answers -the amount of dividend in percentage that wed receive if we
invested one dollar
holding period return - Answers -the return that you earn for the period you hold the
stock
EAR - Answers -effective annual return is the return that is annualized. if you hold a
stock for one year then the holding period return is the same as the EAR
volatility - Answers -way to measure the spread of returns i.e the risk of the asset
classes. volatility is defined as the standard deviation of returns which is the square root
of the variance of the returns
systematic risk - Answers -market/non diversifiable risk = affects all companies int he
economy
systemic risk - Answers -risk that underlying system of economy will fail
Liquidity risk - Answers -undertaintly in assets and the liquidity of it
idiosyncratic risk - Answers -diversifiable risk specific to companies or assets
counter party risk - Answers -risk of not upholding the deal on the contract
credit risk - Answers -risk of defaulting an obligation
country risk - Answers -risk that will affect the country
political risk - Answers -subset of country risk uncertainty in political economy
inflation risk - Answers -prices ^ uncertainty of future inflation
interest rate risk - Answers -
realized returns - Answers -returns that actually happened, they are historical in nature
