Question : 51.Refer to Exhibit 6-1. If the investor sells the bond : 1404058

 

 

51.Refer to Exhibit 6-1. If the investor sells the bond this morning, what is the total percentage return of the investment?

a.5.10%

b.5.21%

c.7.00%

d.9.18%

 

 

 

Terry Corporation

One year ago, Jason purchased 50 shares of Terry Corporation stock at $20 per share. Today, one year later, the stock pays a $2 per share dividend and the price is now $22 per share.

NARREND

 

 

52.Refer to Terry Corporation. What is the total dollar return on the investment for the one year?

a.$4

b.$50

c.$75

d.$200

 

 

 

 

53.Refer to Terry Corporation. What is the total percentage return on the investment for the one year?

a.9.09%

b.10.00%

c.18.18%

d.20.00%

 

 

 

 

54.Refer to Terry Corporation. What is the capital gains yield on the investment for the one year?

a.9.09%

b.10.00%

c.18.18%

d.20.00%

 

 

 

55.What is the risk premium?

a.It is the risk associated with investing in Treasury bonds.

b.It is the difference in annual returns between common stocks and Treasury bills.

c.It is the annual return associated with investing in Treasury bonds.

d.It is the variance in stock market returns over the last fifty years.

 

 

 

YEARReturn

19995%

20009%

2001-8%

20025%

200320%

 

NARREND

 

 

56.Refer to Big Diesel Incorporated. What is the average return over the five year time period?

a.6.00%

b.6.20%

c.6.40%

d.6.60%

 

 

avg. return = (.05 + .09 - .08 + .05 + .20)/5 = .31/5 = .062

 

 

57.Refer to Big Diesel Incorporated. What is the standard deviation of the returns over the five year time period?

a.8.97%

b.9.25%

c.9.74%

d.10.03%

 

 

 

 

58.Refer to Big Diesel Incorporated. If we assume that these returns represent the full sample of Big Diesel returns, what is the 95% confidence interval for Big Diesel returns next year?

a.Between -13.86% and 26.26%

b.Between -11.74% and 42.08%

c.Between 6.20% and 20.06%

d.Between -3.83% and 17.94%

 

 

 

.062 ± 2*.1003 = -.1386, .2686

 

 

59.Consider the following historical returns for Big Diesel Incorporated and inflation for the United States economy:

 

 

YEARBig Diesel

Return

Inflation

19995%2.00%

20009%2.00%

2001-8%2.20%

20025%2.20%

200320%2.20%

 

What is the average real return for Big Diesel over the five-year time period?

a.2.92%

b.3.40%

c.4.00%

d.4.12%

 

 

 

60.Inflation, recession, and higher interest rates are economic events that are characterized as:

a.Company-specific risk that can be diversified away.

b.Market risk.

c.Systematic risk that can be diversified away.

d.Diversifiable risk