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61.A financial publication states that Stone Cold stock had a

Question : 61.A financial publication states that Stone Cold stock had a : 1404059

 

 

61.A financial publication states that Stone Cold stock had a return of 15% last year. If the price of Stone Cold went from $20 to $20.75 over the last year, what dividend was paid?

a.$2.00

b.$2.15

c.$2.25

d.$2.36

 

 

 

 

62.A financial publication states that Stone Cold stock had a return of 15% last year. If the price of Stone Cold went from $20 to $20.75 over the last year, what was the dividend yield over the last year?

a.10.25%

b.11.25%

c.13.25%

d.14.25%

 

 

 

Exhibit 6-2

You purchased a bond last year that pays an 8% annual coupon with a face value of $1,000. At the time of purchase, the bond had a yield to maturity of 10% and had 10 years until maturity. Today, the bond trades at a yield to maturity of 9%.

NARREND

 

 

63.Refer to Exhibit 6-2. What was the dollar return of this investment over the last year?

a.$80

b.$93

c.$143

d.$160

 

 

 

64.Refer to Exhibit 6-2. What was the percentage return of this investment over the last year?

a.8.00%

b.9.00%

c.15.21%

d.16.30%

 

 

 

65.An investor seeks a 4% real return on his investment in a stock fund. If there is 3% inflation in the economy, what nominal return must this stock fund provide to meet his objective?

a.1%

b.4%

c.7.12%

d.9.71%

 

 

 

66.Which statement is FALSE regarding risk and return?

a.For broad asset classes, the relationship between risk and return is nearly linear.

b.Adding multiple stocks to a portfolio can reduce non-systematic risk.

c.There is a nearly linear relationship between risk and return for individual stocks.

d.Because investors can easily eliminate risk through diversification, investors should only be rewarded for non-diversifiable risk.

 

 

 

67.Which statements are TRUE regarding risk and return?

 

 

a.Statement I only

b.Statements I and III only

c.Statements II and III only

d.Statements I and II only

 

 

 

NARRBEGIN: Exhibit 6-3

Exhibit 6-3

Consider the following information concerning stock returns and bond returns over the last 75 years:

 

Average Return1934-2004

Stocks11.7%

Treasury Bills4.1%

 

NARREND

 

 

68.Refer to Exhibit 6-3. Currently, Treasury bills yield 2.50% on the secondary market. What is a good estimate for the return on the stock market in the next year given this information?

a.6.60%

b.7.60%

c.10.10%

d.11.70%

 

 

 

69.Refer to Exhibit 6-3. Currently, investors want a 12% return on stocks as a whole. Based on this information, what is a good estimate for the current return on Treasury Bills?

a.4.10%

b.4.40%

c.7.20%

d.7.60%

 

 

 

70.A bond was purchased last year for $900. The bond pays a 10% annual coupon and has a face value of $1,000. Today, the bond has a coupon yield of 8%. What is the total return for this bond over the last year?

a.8%

b.10%

c.39%

d.50%

 

 

 

 

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