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Question;Question 1. Question;In response to the same external force, the return on one;investment may increase while the return on another investment may decrease.;True;False;Points Received: 1 of 1;Comments;Question 2. Question;Investments with lower standard deviations can be expected;to produce higher rates of return.;True;False;Points Received: 1 of 1;Comments;Question 3. Question;When calculating the present value of either a future single;sum or a future annuity, the applicable interest rate is usually called the;yield to maturity.;compound interest rate.;internal rate of return.;discount rate.;Points Received: 1 of 1;Comments;Question 4. Question;The required return on Beta stock is 14%. The risk-free rate;of return is 4% and the real rate of return is 2%. How much are investors;requiring as compensation for risk?;8%;10%;12%;14%;Points Received: 1 of 1;Comments;Question 5. Question;The maximum rate of return that can be earned for a given;rate of interest occurs when interest is compounded;annually.;daily.;monthly.;continuously.;Points Received: 1 of 1;Comments;Question 6. Question;The possibility that deflation could affect the rate of;return on an investment is referred to as interest rate risk.;True;False;Points Received: 1 of 1;Comments;Question 7. Question;When using a financial calculator or electronic spreadsheet;to calculate an investment's yield, the amount invested is expressed as a;negative number.;True;False;Points Received: 1 of 1;Comments;Question 8. Question;Lower risk investments are associated with higher expected;rates of return.;True;False;Points Received: 1 of 1;Comments;Question 9. Question;Over the long term, which one of the following has;historically had the lowest average annual rate of return?;small-company stocks;long-term government bonds;large-company stocks;long-term corporate bonds;Points Received: 1 of 1;Comments;Question 10. Question;If the discount rate is appropriate for the level of risk, a;satisfactory investment will have a present value of benefits equal to or;greater than than the present value of costs.;True;False;Points Received: 1 of 1;Comments;Question 11. Question;The standard deviation is computed by dividing the sum of;the squared deviations by the number of observations.;True;False;Points Received: 1 of 1;Comments;Question 12. Question;If you own an investment providing periodic returns, your;actual yield on the investment will depend on the reinvestment rate you are;able to obtain.;True;False;Points Received: 1 of 1;Comments;Question 13. Question;The required return on a risky investment includes a real;rate of return, an inflation premium and a risk premium.;True;False;Points Received: 1 of 1;Comments;Question 14. Question;An investment costs $3,500 today. This investment is;expected to produce annual cash flows of $1,200, $1,400, $1,300 and $1,100;respectively, over the next four years. What is the internal rate of return on;this investment?;8.1%;12.4%;14.6%;16.2%;Points Received: 1 of 1;Comments;Question 15. Question;To compute the present value of $1,000 annuity received at;the end of each of the next three years and discounted at the rate of 5% per;year, you should use he following EXCEL command.;ANN;TVM;RATE;PV;Points Received: 1 of 1;Comments;Question 16. Question;Ashley purchased a stock at a price of $27 a share. She;received quarterly dividends of $0.75 per share. After one year, Ashley sold;the stock at a price of $29.25 a share. What is her percentage total return on;this investment?;10.3%;11.1%;17.9%;19.4%;Points Received: 1 of 1;Comments;Question 17. Question;The adage "the sooner one receives a return on a given;investment, the better," reflects the financial concept known as the;time value of money.;total return concept.;historical dividend theory.;expected yield factor.;Points Received: 1 of 1;Comments;Question 18. Question;The holding period return is an excellent method for;comparing a short-term investment to a long-term investment.;True;False;Points Received: 1 of 1;Comments;Question 19. Question;The stock of Plomb Co. falls sharply on news that its CEO;has drowned in a boating accident while on vacation. This is an example of;liquidity risk.;event risk.;accidental risk.;flotation risk.;Points Received: 1 of 1;Comments;Question 20. Question;The holding period is a useful way to compare investments;because it considers;the time value of money;only capital gains, but not income;both income and capital gains or losses;the relative size of investments being;compared;Points Received: 1 of 1;Comments;Question 21. Question;An investment produced annual rates of return of 5%, 12%, 8%;and 11% respectively over the past four years. What is the standard deviation;of these returns?;IN 2.7%;3.2%;3.6%;3.8%;Points Received: 0 of 1;Comments;Question 22. Question;To compute the present value of $1,000 discounted at the;rate of 5% per year, to be received at the end of 3 years, you should use the;following EXCEL command.;DISC;TVM;PV;RATE;Points Received: 1 of 1;Comments;Question 23. Question;Inflation tends to have a favorable impact on;real estate.;common stock.;preferred stock.;bonds.;Points Received: 1 of 1;Comments;Question 24. Question;The yield on an investment is equal to its internal rate of;return.;True;False;Points Received: 1 of 1;Comments;Question 25. Question;Which of the following statements are concerning present value?;I and II only;I and III only;II and III only;I, III and IV only;Points Received: 1 of 1;Comments;Question 26. Question;The present value of $10,000 discounted at 5% per year and;received at the end of 5 years is;$10,000/1.25;$10,000(1.05)5;$10,000/(1.05)5;$10,000 (1.05)1/5;Points Received: 1 of 1;Comments;Question 27. Question;To compute the present value of $1,000 annuity received at;the end of each of the next three years and discounted at the rate of 5% per;year, you should enter the following variables into a financial calculator;N=3, i=5, PMT=1000;N=3, i=5, FV=3000;N=3, i=15, PMT=1000;N=1, i=5, PMT=3000;Points Received: 1 of 1;Comments;Question 28. Question;Interest rates change as the result of changes in the supply;and demand for money.;True;False;Points Received: 1 of 1;Comments;Question 29. Question;If the present value of an investment's benefits equals the;present value of the investment's costs, then the investor would earn a;return equal to the discount rate.;negative rate of return.;0% rate of return.;return greater than the discount rate.;Points Received: 1 of 1;Comments;Question 30. Question;Which one of the following statements is concerning the time value of money?;The future value of $1 at the end of a year is;equal to $1 times 1 plus the annual interest rate.;As the interest rate increases for any given;year, the future value interest factor will decrease.;The future value of $1 decreases with the;passage of time.;The future value interest factor is equal to;zero if the interest rate is zero.;Points Received: 1 of 1;Comments;* Times are displayed;in (GMT-10:00) Hawaii


Paper#45861 | Written in 18-Jul-2015

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