20 You purchased a share of stock for $20. One year later you received $1 as a dividend and sold the share for $24. What was your holding-period return?

A 20%

B 50%

C 25%

D 40%

E None of the options

21 You have been given this probability distribution for the holding-period return for KMP stock. You invest $100 in the stock. The expected return on your investment is

A $10

B $12

C $15

D $13

E $8

Use the mean to estimate your future dollar return on your $100 investment. In the highlighted cells G16:G18, calculate the error from what you expect to earn on your $100 investment in the grey highlighted area

22 The mean of the errors is

A Zero

B Negative

C Positive

D Impossible to determine

23 The variance is the mean square error from the mean. The variance of the return on your $100 investment is

A 169

B 225.5

C 255.5

D 284.6

24 The standard deviation of the return on your $100 investment is

A 13

B 15.02

C 15.98

D 16.87

25 The units by which we measure the variance and the standard deviation in the above questions are:

A The same unit, and the unit is dollar

B The same unit, and the unit is percent

C Only the variance unit is dollar

D Only the standard deviation unit is dollar

E Only the standard deviation unit is percent

26 If a portfolio had a return of 18%, the risk-free asset return was 5%, and the standard deviation of the portfolio's excess returns was 34%, the risk premium would be

A 13%

B 18%

C 49%

D 12%

E 29%

27 You are considering purchasing 100 shares of Boeing. One year later, you expect a dividend of $8 and expect the price to be $320. If you require a 12% return on your investment, what is the highest price you are willing to pay?

A $328.00

B $300.00

C $292.86

D $358.40

Data for questions 28 through 38 copy and paste in excel

Return

Year GFAFX SPY GFAFX SPY

2001 1 1

2002 -0.2204 -0.221061 0.7796 0.778938636

2003 0.3287 0.286907 1.03585452 1.002421691

2004 0.1189 0.108820 1.159017622 1.111505142

2005 0.1425 0.049008 1.324177634 1.16597739

2006 0.1076 0.157933 1.466659147 1.350123561

2007 0.1096 0.054937 1.62740499 1.424295217

2008 -0.3907 -0.369985 0.99157786 0.897327202

2009 0.3458 0.264649 1.334465484 1.134803826

2010 0.1229 0.150614 1.498471292 1.305720925

2011 -0.0488 0.056253 1.425345893 1.37917222

2012 0.2052 0.135706 1.71782687 1.566334217

2013 0.3379 0.275127 2.29828057 1.997275764

2014 0.0924 0.1595239 2.510641694 2.315888984

2015 0.0534 -0.028678523 2.644709961 2.249472709

2016 0.0838 0.11541722 2.866336656 2.509100595

2017 0.2607 0.19018843 3.613590622 2.986302498

2018 -0.0297 -0.058902872 3.50626698 2.810400704

28 Theexpected annual return on GFAFX rounded to 4-digits accuracy is

29 Theexpected annual return on SPYrounded to 4-digits accuracy is

30 The standard deviation of GFAFX rounded to 4-digits accuracy

31 The standard deviation of SPY rounded to 4-digits accuracy

32 The terminal value at 2018 of a dollar invested in GFAFXat 2001 end is

33 The terminal value at 2018 of a dollar invested in SPYat 2001 end is

34 The geometric mean of ther return on GFAFX is

35 The geometric mean of ther return on SPY is

36 If annual risk free rate is 1%. The Sharpe ratio for GFAFX is

37 If annual risk free rate is 1%. The Sharpe ratio for SPY is

38 Assume that both return are drawn from normal distributions with their respective means and respective standard deviation. The probability of losing more than25 cents on the dollar for each investment is

Assume you invest in a portfolio Q by investing60% in SPY and 40% in a risk free bond earning 2% annual return. Examine the formula that calculates the return on portfolio Qin the blue highlighted area.

39 Calculate the means return on portfolio Qin the blue highlighted area and round it into 4 digits.

40 Calculate the standard deviation of thereturn on portfolio Qin the blue highlighted area and round it to 4 digits.

41 The standard deviation of Q

A is much lower than the average of the standard deviations of each of its constituents

B is much higher than the average of the standard deviations of each of its constituents

C shows the impact of diversification in risk reduction

D A and C

Data for questions 39 and 41 copy and paste on excel.

0.6 0.4

Year SPY Risk free Q

2001

2002 -0.221061 0.02 -0.124636819

2003 0.286907 0.02 0.180144283

2004 0.108820 0.02 0.073291954

2005 0.049008 0.02 0.037404586

2006 0.157933 0.02 0.10275973

2007 0.054937 0.02 0.040962164

2008 -0.369985 0.02 -0.213991063

2009 0.264649 0.02 0.166789318

2010 0.150614 0.02 0.098368271

2011 0.056253 0.02 0.041752065

2012 0.135706 0.02 0.089423622

2013 0.275127 0.02 0.173076473

2014 0.1595239 0.02 0.10371434

2015 -0.028678523 0.02 -0.009207114

2016 0.11541722 0.02 0.077250332

2017 0.19018843 0.02 0.122113058