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- A Brief History of Risk and ReturnThe Investment ProcessOverview of Security TypesMutual Funds and Other Investment CompaniesThe Stock MarketCommon Stock ValuationStock Price Behavior and Market EfficiencyBehavioral Finance and the Psychology of InvestingInterest RatesBond Prices and YieldsDiversification and Risky Asset AllocationReturn,Risk,and the Security Market LinePerformance Evaluation and Risk ManagementFutures ContractsStock OptionsOption ValuationProjecting Cash Flow and EarningsCorporate and Government BondsGlobal Economic Activity and Industry AnalysisMortgage-Backed Securities

Question 1

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change in the price of the stock over a period of time.

dividend income divided by the beginning price per share.

capital gain or loss plus any dividend income.

change in the stock price divided by the original stock price.

annual dividend income received.

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Question 2

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average stock price.

initial stock price.

ending stock price.

total annual return.

capital gain.

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Question 3

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(P_{t} - P_{t + 1} + D_{t + 1})/P_{t + 1}.

(P_{t + 1} - P_{t} + D_{t})/P_{t}.

D_{t + 1}/P_{t}.

(P_{t + 1} - P_{t})/P_{t}.

(P_{t + 1} - P_{t})/P_{t + 1}.

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Question 4

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capital gains yield.

dividend yield.

holding period return.

effective annual return.

initial return.

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Question 5

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another term for the dividend yield.

defined as the increase in the value of a share of stock over time.

the rate of return earned on an investment in a firm that you personally own.

defined as the total of the capital gains yield plus the dividend yield.

the rate of return on a riskless investment.

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Question 6

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risk premium.

deflated rate of return.

risk-free rate.

expected rate of return.

market rate of return.

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Question 7

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a risky asset minus the risk-free rate.

the overall market.

a U.S. Treasury bill.

a risky asset minus the inflation rate.

a riskless investment.

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Question 8

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inflated return.

capital gains yield.

real return.

riskless rate.

risk premium.

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Question 9

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volatility.

total return.

capital gains.

changes in dividend yields.

changes in the capital gains rate.

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Question 10

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normal distribution.

variance distribution.

expected rate of return.

average geometric return.

average arithmetic return.

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Question 11

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summation of the returns for a number of years, t, divided by (t - 1).

compound total return for a period of years, t, divided by t.

average compound return earned per year over a multi-year period.

average squared return earned in a single year.

return earned in an average year over a multi-year period.

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Question 12

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total return

average capital gains yield

variance

arithmetic average return

geometric average return

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Question 13

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total return.

average capital gains yield.

dollar-weighted average return.

arithmetic average return.

geometric average return.

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Question 14

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The dividend yield can be zero while the total return must be a positive value.

The total return can be negative but the dividend yield cannot be negative.

The total return must be greater than the dividend yield.

The total return plus the capital gains yield is equal to the dividend yield.

The dividend yield exceeds the total return when a stock increases in value.

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Question 15

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is less than a holding period return when the holding period is less than one year.

is expressed as the summation of the capital gains yield and the dividend yield on an investment.

is expressed as the capital gains yield that would have been realized if an investment had been held for a twelve-month period.

is computed as (1 + holding period percentage return)^{m}, where m is the number of holding periods in a year.

is computed as (1 + holding period percentage return)^{m}, where m is the number of months in the holding period.

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Question 16

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.25

.33

.40

3.00

4.00

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Question 17

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when either the investment is sold or the investment has been owned for at least one year.

only if the investment is sold and the capital gain is realized.

whenever dividends are paid.

whether or not the investment is sold.

only if the investment incurs a loss in value or is sold.

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Question 18

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capital gains yield.

effective annual rate of return.

total percentage return.

dividend yield.

annualized dividend yield.

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Question 19

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holding period dollar return

capital gains yield

dividend yield

holding period percentage return

effective annual return

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Question 20

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equity ratio.

total book value.

market share.

market capitalization.

time value.

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