Test Bank for Corporate Finance 11th Edition Ross, Westerfield, Jaffe.

CorporategFinance,g12eg(Ross)
Chapterg10g LessonsgfromgMarketgHistory

1) AlphagIndustriesgstockgsoldgforg$39gagsharegatgthegbeginninggofgthegyear.gDuringgthegyear,gt
hegcompanygpaidgagdividendgofg$3gagsharegandgthengendedgthegyeargwithgagstockgpricegofg$37.g
Thegchangegingthegstockgpricegisgbestgdescribedgasga:
A) capitalggain.
B) positivegtotalgdollargreturn.
C) capitalgloss.
D) negativegtotalgdollargreturn.
E) negativegdividendgyield.

Answer:g CgDifficul
ty:g1gEasy
Section:g 10.1gReturns
gTopic:g Totalgreturng
Bloom's:g Remember
AACSB:g ReflectivegThinkinggAccessi
bility:g KeyboardgNavigation

2) Thegcapitalggainsgyieldgplusgthegdividendgyieldgongagsecuritygisgcalledgthe:
A) variancegofgreturns.
B) geometricgreturn.
C) averagegperiodgreturn.
D) currentgyield.
E) totalgreturn.

Answer:g EgDifficul
ty:g1gEasy
Section:g 10.1gReturns
gTopic:g Totalgreturng
Bloom's:g Remember
AACSB:g ReflectivegThinkinggAccessi
bility:g KeyboardgNavigation




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HillgEducation.

,3) Agportfoliogofgsmall-
companygcommongstocks,gasgusedgingthisgcourse,gisgbestgdescribedgasgthegstocksgofgthegfirmsgw
hich:
A) representgthegsmallestgtwentygpercentgofgthegcompaniesglistedgongthegNYSE.
B) haveggonegpublicgwithingthegpastgfivegyears.
C) aregtoogsmallgtogbeglistedgongthegNYSE.
D) aregincludedgingthegS&Pg500gindex.
E) tradegpubliclygforg$5gagsharegorgless.

Answer:g AgDifficul
ty:g1gEasy
Section:g 10.2gHoldinggPeriodgReturnsg
Topic:g Assetgclasses
Bloom's:g Rememberg AACS
B:g ReflectivegThinking
Accessibility:g KeyboardgNavigation

4) Basedgongthegperiodgofg1926gthroughg2017,g
havegtendedgtogoutperformgothergsecuritiesgovergtheglong-term.
A) U.S.gTreasurygbills
B) large-companyg stocks
C) long-termgcorporategbonds
D) small-companyg stocks
E) long-termggovernmentgbonds

Answer:g DgDifficul
ty:g1gEasy
Section:g 10.2gHoldinggPeriodgReturnsg
Topic:g HistoricalgperformancegBloom'
s:g Understand
AACSB:g ReflectivegThinkinggAccessi
bility:g KeyboardgNavigation

5) Basedgongthegperiodgofg1926gthroughg2017,gU.S.gTreasurygbillsghavegproducedgannualgratesg
ofgreturngthat:
A) rangedgfromg−1gpercentgtog+15gpercent.
B) rangedgfromg−1gpercentgtog+5gpercent.
C) weregnegativegonlygduringgthegGreatgDepression.
D) havegalwaysgbeengpositive.
E) nevergexceededg6gpercent.

Answer:g DgDifficul
ty:g1gEasy
Section:g 10.2gHoldinggPeriodgReturnsg
Topic:g HistoricalgperformancegBloom'
s:g Understand
AACSB:g ReflectivegThinking
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NogreproductiongorgdistributiongwithoutgthegpriorgwrittengconsentgofgMcGraw-
HillgEducation.

,Accessibility:g KeyboardgNavigation

6) Anothergtermgthatgrefersgtogthegaveragegrategofgreturngisgthe:
A) variance.
B) standardgdeviation.
C) realgreturn.
D) mean.
E) histogram.

Answer:g DgDifficul
ty:g1gEasy
Section:g 10.3gReturngStatisticsg
Topic:g PortfoliogreturngBloom'
s:g Remember
AACSB:g ReflectivegThinkinggAccessi
bility:g KeyboardgNavigation

7) Whichgonegofgthegfollowinggtypesgofgsecuritiesghasgtendedgtogproducegtheglowestgrealgrateg
ofgreturngforgthegperiodg1926gthroughg2017?
A) U.S.gTreasurygbills
B) Long-termggovernmentgbonds
C) Small-companygstocks
D) Large-companyg stocks
E) Long-termgcorporategbonds

Answer:g AgDifficul
ty:g1gEasy
Section:g 10.4gAveragegStockgReturnsgandgRisk-
FreegReturnsgTopic:g Historicalgperformance
Bloom's:g Rememberg AACS
B:g ReflectivegThinking
Accessibility:g KeyboardgNavigation




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Copyrightg©g2019gMcGraw-HillgEducation.gAllgrightsgreserved.
NogreproductiongorgdistributiongwithoutgthegpriorgwrittengconsentgofgMcGraw-
HillgEducation.

, 8) Ongaverage,gforgthegperiodg1926gthroughg2017:
A) thegrealgrategofgreturngongU.S.gTreasurygbillsghasgbeengnegative.
B) small-companygstocksghavegunderperformedglarge-companygstocks.
C) long-termggovernmentgbondsghavegproducedghighergreturnsgthanglong-termgcorporategbonds.
D) thegexcessgreturngonglong-termgcorporategbondsghasgexceededgthegexcessgreturngonglong-
termggovernmentgbonds.
E) thegexcessgreturngonglarge-companygstocksghasgexceededgthegexcessgreturngongsmall-
companygstocks.

Answer:g DgDifficul
ty:g1gEasy
Section:g 10.4gAveragegStockgReturnsgandgRisk-
FreegReturnsgTopic:g Historicalgperformance
Bloom's:g UnderstandgAACS
B:g ReflectivegThinking
Accessibility:g KeyboardgNavigation

9) Overgthegperiodgofg1926gthroughg2017,gthegannualgrategofgreturngong
hasgbeengmoregvolatilegthangthegannualgrategofgreturngong .
A) large-companygstocks;gsmall-companygstocks
B) U.S.gTreasurygbills;gsmall-companygstocks
C) U.S.gTreasurygbills;glong-termggovernmentgbonds
D) long-termgcorporategbonds;gsmall-companygstocks
E) large-companygstocks;glong-termgcorporategbonds

Answer:g EgDifficul
ty:g1gEasy
Section:g 10.4gAveragegStockgReturnsgandgRisk-
FreegReturnsgTopic:g Historicalgperformance
Bloom's:g UnderstandgAACS
B:g ReflectivegThinking
Accessibility:g KeyboardgNavigation




4
Copyrightg©g2019gMcGraw-HillgEducation.gAllgrightsgreserved.
NogreproductiongorgdistributiongwithoutgthegpriorgwrittengconsentgofgMcGraw-
HillgEducation.