Question 1

1pts

Calculate the standard deviation of stock PSU over the last three years. Year 1: 10%, Year 2: -3%, Year 3: 5%

0.58%

0.70%

1.17%

3.54%

6.55%

Question 2

1pts

True or False: A rational investor will require a higher return on treasury bonds than stocks.

True

False

Question 3

1pts

Calculate the rate of return on an investment that you bought for $50, received a $3 dividend, and sold one year later for $55?

10%

5.5%

14.5%

9%

16%

Question 4

1pts

Given the following information, calculate the Fund's alpha:

T-Bill Return: 2%

S&P 500 Return: 10%

Beta: 1.25

Fund's Return: 15%

Group of answer choices

5%

-3%

2%

3%

-5%

Question 5

1pts

If the market returns 8%, PennCo's stock returns 12%, if the market returns -8%, PennCo's stock returns -12%. What is PennCo's Beta?

Group of answer choices

0.4

0.66

1.4

1.5

0.33

Question 6

1pts

The ________ helps us to predict the expected return of a risky asset.

Weighted Average Cost of Capital

Capital Asset Pricing Model

Capital Structure Model

Risk/Return Model

Rational Investor Risk Model

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Question 7

1pts

Calculate security ABC's expected return using the capital asset pricing model. Risk Free Rate: 5%, Market Return: 15%, Beta: 1.5

10%

15%

17%

20%

25%

Question 8

1pts

Calculate the compound annual return on an investment that was purchased at $20 and sold 5 years later for $40.

14.9%

100%

20%

4.6%

16.8%

Question 9

1pts

There is an indirect relationship between risk and return.

True

False

Question 10

1pts

Which of the following asset classes would you expect to have the highest expected return and standard deviation?

Treasury bills

Government bonds

Corporate bonds

Large company stocks

Small company stocks