Question 1 of 10

1.0 Points

A stock has had returns of 3%, 38%, 21%, -15%, 29%, and -13% over the last six years. What are the arithmetic and geometric returns for the stock?

A.Arithmetic 10.5%; Geometric 5.1612%

B.Arithmetic 10.5%; Geometric 8.602%

C.Arithmetic 8.602%; Geometric 10.5%

D.Arithmetic 10.5%; Geometric 108.602%

Question 2 of 10

1.0 Points

Suppose a stock had an initial price of $91 per share, paid a dividend of $2.40 per share during the year, and had an ending share price of $83. Compute the percentage total return.

A.8.79%

B.-6.15%

C.2.64%

D.-3.51

Question 3 of 10

1.0 Points

Currently, the risk-free rate is 6% and the market risk premium is 5%. Given this information, which of the following statements is correct?

A.An index fund with beta = 1.0 should have a required return greater than 11%.

B.An index fund with beta = 1.0 should have a required return of 11%.

C.An index fund with beta = 1.0 should have a required return less than 11%.

D.If a stocks beta doubles, its required return must also double.

Question 4 of 10

1.0 Points

Suppose you observe the following situation: Security Pete Corp. Beta 1.35, expected return 0.145. Security Repete Co. Beta 1.04, expected return 0.118. Assume these securities are correctly priced. Based on the CAPM, what is the risk-free rate?

A.11.45%

B.2.74%

C.8.71%

D.2.70%

Question 5 of 10

1.0 Points

The Isberg Company just paid a dividend of $0.80 per share, and that dividend is expected to grow at a constant rate of 6.00% per year in the future. The companys beta is 1.25, the market risk premium is 5.00%, and the risk-free rate is 4.00%. What is the companys current stock price?

A.$20.45

B.$21.49

C.$19.95

D.$20.96