Need help for question: 8, 9, 14, 15, 16, 20

question 8 9 14 15 16 are True of False question

Fin 425 Fall 2016 Homework I Due September 16 Name _________________________ True or false (no explanation required) 1. Because the Russell 3000 index contains many more small firms than the S&P500 its historical return has been much higher than the S&P500 return. 2. Because the Russell 2000 is a small-cap index its historical return has been much higher than the Russell 3000 return. 3. The S&P500 is a value-weighted index. 4. The Dow Jones Industrial Average is a value-weighted index. 5. The current value of the S&P500 index is higher than it was in 1990. 6. The current value of the Nikkei 225 index is higher than it was in 1990. 7. The Sharpe ratio for treasury bills is one. 8. If the spread between the BBB yield and the AAA yield on US bonds was 3%, it would indicate a high level of uncertainty in financial markets. 9. The abnormal return for an equity is alpha = realized excess return - benchmark excess return. 10.The US represents over half of all the world's public equity markets (in terms of market value). 11.The benefit of diversification decreases as the correlation increases. 12.On average, stock returns are positively correlated with bond returns. 13.All else equal, attractive CEOs earn more than their less attractive counterparts. 14.Because of informational advantage, we would expect that the average IPO would have poor long-term abnormal returns. 15.The current price to earnings ratio for the S&P500 is about 24 and its longterm average is about 16, suggesting that the index is under-valued. 16.The current 10-year riskfree return is currently higher than the S&P500 dividend yield. 17.The yield curve almost always slopes upward. 18.A AAA-rated US$ bond will have a lower yield than a BBB-rated US$ bond. 19.In 2008, world equity markets (as measured by the MSCI world index) lost about: a. 10% b. 20% c. 30% d. 40% e. 50% 20.The current 2-year riskfree return (in $US) is about a. 0.7% b. 1.7% c. 2.7% d. 3.7% e. 4.7% 21.The current dividend yield on the S&P500 is about a. .1% b. 1.1% c. 2.1% d. 3.1% e. 4.1% f. Trick question. An index does not pay dividends. 22.In 2015 the highest paid US CEO made a. $1.56 million b. $15.6 million c. $156 million d. $1,560 million 23. In 2015 the highest paid US hedge fund manager made a. $1.7 million b. $17 million c. $170 million d. $1,700 million 24.(Worth 4 points) Fill in the blanks in the following table Firm beta = Month 1 2 3 4 5 0.7 Stock excess return 0.02 0.04 -0.05 0.07 0.10 Benchmark excess return 0.03 0.05 -0.10 0.12 0.10 Monthly alpha Cumulative alpha 28.Suppose we have the following set of set of annual returns on an asset: and . What is the arithmetic mean return? 29.Suppose we have the following set of set of annual returns on an asset: and . What is the geometric mean return? 30.Which of the 2 characterizations of return in the previous two questions more accurately describes the investor's actual return