Finance Chapter 10 A stock returned 11 percent, 16 percent, −7 percent, and −13 percent

stock pays an annual dividend of $1.06 per share. Today, she sold all of her shares for $37.43 per

share. What is her total dollar return on this investment?

A) −$703

B) −$838

C) $1,022

D) $1,262

E) −$1,050

50) One year ago, Barkley’s stock sold for $28 a share. During last year, Barkley’s paid $1.23 per

share in dividends and saw its stock price increase by 7 percent for the year. Today, the firm

announced that it will pay $1.30 per share in dividends this year. What do you know with certainty

about the performance of Barkley’s stock for this year?

A) The total rate of return will be higher this year than it was last year.

B) The dividend yield for this year will be higher than it was last year.

C) The capital gains yield will be positive.

D) The dividend yield for this year will be lower than it was last year.

E) The total rate of return will be lower this year than it was last year.

51) One year ago, Aimee purchased 300 shares of stock at a price of $21.39 per share. Over the last

year, she received total dividend income of $69. What is the dividend yield?

A) 2.20%

B) 1.08%

C) 2.47%

D) 0.65%

E) 2.14%

52) Winslow stock is currently selling for $39 a share. The stock has a dividend yield of 2.3

percent. How much dividend income will you receive per year if you purchase 400 shares of this

stock?

A) $248.80

B) $390.47

C) 358.80

D) $239.50

E) $360.00

53) One year ago, you purchased a stock at a price of $47.26 a share. Today, you sold the stock and

realized a total return of 9.8 percent. Your capital gain was $3.68 a share. What was your dividend

yield on this stock?

A) 1.25%

B) 1.85%

C) 2.01%

D) 1.75%

E) 1.35%

54) You just sold 600 shares of stock for $42.09 a share. One year ago, you purchased the stock for

$44.50 a share and have received dividends totalling $0.68 per share. What is your total capital

gain in dollars?

A) −$1,446

B) −$1,038

C) $1,038

D) $1,446

E) $1,854

55) Deltona stock sold for $52.84 a share 1 year ago and pays an annual dividend of $3.20. What

does the stock price need to be today for the annual capital gain to be 6.8 percent?

A) $53.23

B) $49.25

C) $56.43

D) $48.63

E) $54.18

56) One year ago, Ted purchased 300 shares of stock at $18.09 a share. Today, he received a total

of $267 in dividends and sold his shares for a total of $5,250. What was his total rate of return?

A) −3.57%

B) −2.94%

C) −4.43%

D) 2.47%

E) 1.66%

57) EXO shares are currently selling for $22.08 each. You bought 300 shares one year ago at

$18.60 a share and received dividend payments of $0.62 a share. What is the percentage capital

gain for the period?

A) 14.17%

B) 18.71%

C) 20.24%

D) 23.21%

E) 22.04%

58) The annual returns for KLO stock for the last three years are 7.4 percent, 3.2 percent, and 17.8

percent. Assuming no dividends were paid, what was the 3-year holding period percentage return?

A) 28.40%

B) 25.70%

C) 31.40%

D) 30.57%

E) 36.52%

59) Kurt’s Toy Co. has total annual returns for the past 5 years of –8.2 percent, 11.7 percent, –6.4

percent, 18.7 percent, and 6.8 percent. What is the 5-year holding period return?

A) 9.00%

B) 17.50%

C) 22.60%

D) 21.67%

E) 20.33%

60) Eight months ago, Isaac purchased 500 shares of stock at a price of $36.20 a share. To date, he

has received two quarterly dividends of $.46 a share each. If he sells his shares at the current price

of $36.44 a share, what will be his holding period percentage return?

A) .55%

B) 1.01%

C) 3.20%

D) 2.78%

E) 2.40%

61) Over the past 3 years, a stock had annual returns of 6.4 percent, 11.9 percent, and 14.8 percent.

What is the mean return?

A) 11.03%

B) 7.47%

C) 8.28%

D) 16.55%

E) 12.60%

62) For the period 1926 to 2015, small-company stocks had an average return of 16.5 percent, U.S.

Treasury bills returned 3.5 percent, and inflation averaged 3.0 percent. What was the risk premium

on small-company stocks during this period?

A) 12.5 percent

B) 20.0 percent

C) 13.0 percent

D) 13.5 percent

E) 10.0 percent

63) Assume inflation averaged 1.2 percent during a period in which U.S. Treasury bills earned 1.3

percent. What was the rate of return on large-company stocks if the risk premium on those stocks

was 6.8 percent for the period?

A) 8.1%

B) 8.0%

C) 7.9%

D) 9.3%

E) 9.2%

64) Assume that during a 7-year period, inflation averaged 2.8 percent, U.S. Treasury bill yields

averaged 3.3 percent, and long-term government bond yields averaged 5.9 percent. What was the

average rate of return on long-term corporate bonds if they commanded a risk premium of 0.2

percent more than the long-term government bonds?

A) 9.2%

B) 8.9%

C) 5.7%

D) 6.1%

E) 9.4%

65) Assume a 20-year period produced small-company returns of 16.7 percent with a risk premium

of 9.8 percent, inflation of 5.4 percent, and long-term government bond returns of 10.1 percent.

What was the risk-free rate of return during this period?

A) 4.7%

B) 6.6%

C) 11.3%

D) 6.9%

E) 4.4%

66) Suppose you own a risky asset with an expected return of 18.2 percent and a standard deviation

of 27.2 percent. If the returns are normally distributed, the approximate probability of losing 9

percent or more in a single year is ________ percent.

A) .26

B) 4.56

C) 15.87

D) 31.74

E) 2.28

67) A stock had annual returns of 9 percent, −16 percent, 14 percent, and 2 percent over the past 4

years. What is the standard deviation of these returns?

A) 11.33%

B) 16.09%

C) 9.10%

D) 13.12%

E) 7.99%

68) A stock has an expected rate of return of 13.9 percent and a standard deviation of 23.3 percent.

Which one of the following best describes the probability that this stock will lose more than 1/3 of

its value in any one year?

A) Less than 0.1%

B) Approximately 2.25%

C) Approximately 1.13%

D) Less than 0.26%

E) Approximately 4.66%

69) A stock returned 11 percent, 16 percent, −7 percent, and −13 percent annually for the past 4

years. Based on this information, what is the 99.74 percent probability range for any one given

year?

A) −34.54 to 38.04%

B) −36.1 to 40.1%

C) −32.5 to 35.5%

D) −40.06 to 43.56%

E) −44.82 to 47.32%

70) A stock had returns of 8 percent, 13 percent, and −3 percent for the past 3 years. Based on these

returns, what is the approximate probability that this stock will earn at least 14.19 percent in any

one given year?

A) 8.00%

B) 2.28%

C) 15.87%

D) 4.56%

E) 31.74%

71) A stock had returns of 22 percent, 1 percent, −27 percent, 19 percent, and 7 percent annually

for the past 5 years. Based on these returns, what is the approximate probability that this stock will

earn at least 60 percent in any one given year?

A) almost 0%

B) slightly more than 2.28%

C) slightly more than 0.13%

D) slightly less than 2.28%

E) slightly less than 0.13%

72) A stock had returns of 13 percent, 8 percent, 1 percent, and −9 percent annually for the past 4

years. What is the mean and standard deviation of these returns?

A) 4.33%; 9.54%

B) 4.33%; 11.08%

C) 3.25%; 9.54%

D) 3.25%; 13.22%

E) 3.25%; 11.08%

73) A stock had returns of 11 percent, 26 percent, 8 percent, and −38 percent annually for the past

4 years. What is the mean and variance of these returns?

A) 1.75%; .057319

B) 1.75%; .076425

C) 3.50%; .057319

D) 3.50%; .062833

E) 3.50%; .076425

74) What are the arithmetic and geometric average returns for a stock with annual returns of 6.2

percent, 12.8 percent, −7.7 percent, and 9.4 percent?

A) 5.175%; 5.028%

B) 6.256%; 4.892%

C) 5.175%; 4.873%

D) 6.256%; 5.028%

E) 6.900%; 4.873%

75) What are the arithmetic and geometric average returns for a stock with annual returns of 14.9

percent, 14.6 percent, −2.8 percent, and 9.7 percent?

A) 9.100%; 8.673%

B) 8.882%; 8.854%

C) 9.100%; 8.771%

D) 8.897%; 8.854%

E) 9.100%; 8.854%

76) A stock had returns of 7 percent, 7 percent, 7 percent, and 7 percent annually over the past 4

years. What is the geometric average return for this time period?

A) 6.875%

B) 7%

C) 6.929%

D) 9.998%

E) 9.441%

77) Jen invested $1 fifty years ago. Today, her investment is worth $18,329.46. What is the

geometric average return on this investment?

A) 30.27%

B) 21.69%

C) 32.46%

D) 36.67%

E) 25.09%

78) The arithmetic average return on your portfolio for the past 5 years is 9.3 percent. You earned

−7.4 percent, 17.1 percent, 6.3 percent, and 11.8 percent for 4 of those 5 years. What rate of return

did you earn in the fifth year?

A) 18.7%

B) 16.0%

C) 13.2%

D) 19.6%

E) 17.5%

79) GLM stock provided annual returns of 9.9 percent, 8.2 percent, −6.7 percent, 4.5 percent, and

7.1 percent over the last 5 years. What is the geometric average rate of return?

A) 6.03%

B) 4.42%

C) 6.69%

D) 5.48%

E) 5.56%

80) Assume a $1 investment in a stock 23 years ago is now worth $28.82. What is the geometric

average return for the period?

A) 13.52%

B) 15.74%

C) 22.08%

D) 25.30%

E) 19.03%