College Savings Scenario A couple's first child has just started kindergarten, and they have decided to save money for her college education. They have $1,032 invested so far. They are planning to invest an additional $300 each month for the next 13 years. 6. If their investments have a return of 7.0%, compounded monthly, how much will they have at the end of 13 years, if they start today? a. $78,556 b. $80,978 c. $79,000 d. $77,231 e. $81,461 7. Refer to the College Savings scenario above. If their investments have a return of 7.0%, compounded monthly, how much will they have at the end of 13 years, if they start a month from now? c. a. $78,556 b. $80,978 $79,000 d. $77,231 e. $81,461 8. Over the past 75 years, we have observed that investments with the highest average annual returns also tend to have the highest standard deviations of their annual returns. This observation supports the notion that there is a positive correlation between risk and return. Which of the following lists correctly ranks investments from lowest to highest returns and risk? a. Long-term corporate bonds, large-company stocks, small-company stocks, U.S. Treasury bills b. U.S. Treasury bills, long-term corporate bonds, large-company stocks, small-company stocks c. U.S. Treasury bills, long-term corporate bonds, small-company stocks, large-company stocks d. Small-company stocks, long-term corporate bonds, large-company stocks_ US Treasury bills e. Small-company stocks, large-company stocks, long-term corporate bonds, U.S. Treasury bills Stock Returns In the next two problems, you'll use the information below to calculate Disney's stock dividend yield, capital gains yield, total return, average return and coefficient of variation. Date Company / Stock Symbol Dividend Price Per per Share Share 0.880 127.46 Walt Disney Co. Nov. 2020 DIS Nov. 2019 1.760 150.68 Nov. 2018 1.680 113.32 Nov. 2017 101.12 9. Using the data above, calculate the missing information. Then answer the questions that follow. 12 Months Dividend Yield, Capital Gains Yield, Total Annual Ending Nov. DY CGY Return, r 2020 2019 1.6% 33.0% 34.5% 2018 1.7% 12.1% 13.7% Average Rate of Return, r Standard Deviation, 24.8% Coefficient of Variation, CV What are the 2020 DY and Annual Return? a. DY is 0.6% and the Total Return is 13.7% b. DY is 1.6% and the Total Return is 10.5% c. DY is 2.6% and the Total Return is 28.0% d. DY is 2.6% and the Total Return is 12.3% e. DY is 0.6% and the Total Return is -14.8% 10. What are the average rate of return and coefficient of variation? a. The average rate of return is 10.9% and the CV is 1.65 b. The average rate of return is 10.9% and the CV is 0.61 c. The average rate of return is 11.0% and the CV is 1.88 d. The average rate of return is 11.1% and the CV is 2.22 The average rate of return is 11.1% and the CV is 0.45 e. 11. The Walt Disney Co. (DIS) stock has a beta of 1.08. What is DIS' required rate of return, if T-bills return 0.12% and the return on a total market index fund is 11.09%? a. 9.3% b. 12.9% C. 12.0% d. 7.1% e. 6.3% College Savings Scenario A couple's first child has just started kindergarten, and they have decided to save money for her college education. They have $1,032 invested so far. They are planning to invest an additional $300 each month for the next 13 years. 6. If their investments have a return of 7.0%, compounded monthly, how much will they have at the end of 13 years, if they start today? a. $78,556 b. $80,978 c. $79,000 d. $77,231 e. $81,461 7. Refer to the College Savings scenario above. If their investments have a return of 7.0%, compounded monthly, how much will they have at the end of 13 years, if they start a month from now? c. a. $78,556 b. $80,978 $79,000 d. $77,231 e. $81,461 8. Over the past 75 years, we have observed that investments with the highest average annual returns also tend to have the highest standard deviations of their annual returns. This observation supports the notion that there is a positive correlation between risk and return. Which of the following lists correctly ranks investments from lowest to highest returns and risk? a. Long-term corporate bonds, large-company stocks, small-company stocks, U.S. Treasury bills b. U.S. Treasury bills, long-term corporate bonds, large-company stocks, small-company stocks c. U.S. Treasury bills, long-term corporate bonds, small-company stocks, large-company stocks d. Small-company stocks, long-term corporate bonds, large-company stocks_ US Treasury bills e. Small-company stocks, large-company stocks, long-term corporate bonds, U.S. Treasury bills Stock Returns In the next two problems, you'll use the information below to calculate Disney's stock dividend yield, capital gains yield, total return, average return and coefficient of variation. Date Company / Stock Symbol Dividend Price Per per Share Share 0.880 127.46 Walt Disney Co. Nov. 2020 DIS Nov. 2019 1.760 150.68 Nov. 2018 1.680 113.32 Nov. 2017 101.12 9. Using the data above, calculate the missing information. Then answer the questions that follow. 12 Months Dividend Yield, Capital Gains Yield, Total Annual Ending Nov. DY CGY Return, r 2020 2019 1.6% 33.0% 34.5% 2018 1.7% 12.1% 13.7% Average Rate of Return, r Standard Deviation, 24.8% Coefficient of Variation, CV What are the 2020 DY and Annual Return? a. DY is 0.6% and the Total Return is 13.7% b. DY is 1.6% and the Total Return is 10.5% c. DY is 2.6% and the Total Return is 28.0% d. DY is 2.6% and the Total Return is 12.3% e. DY is 0.6% and the Total Return is -14.8% 10. What are the average rate of return and coefficient of variation? a. The average rate of return is 10.9% and the CV is 1.65 b. The average rate of return is 10.9% and the CV is 0.61 c. The average rate of return is 11.0% and the CV is 1.88 d. The average rate of return is 11.1% and the CV is 2.22 The average rate of return is 11.1% and the CV is 0.45 e. 11. The Walt Disney Co. (DIS) stock has a beta of 1.08. What is DIS' required rate of return, if T-bills return 0.12% and the return on a total market index fund is 11.09%? a. 9.3% b. 12.9% C. 12.0% d. 7.1% e. 6.3%