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Question 1

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risk premium

geometric return

arithmetic

standard deviation

variance

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Question 2

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The average squared difference between the arithmetic and the geometric average annual returns.

The squared summation of the differences between the actual returns and the average geometric return.

The average difference between the annual returns and the average return for the period.

The difference between the arithmetic average and the geometric average return for the period.

The average squared difference between the actual returns and the arithmetic average return.

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Question 3

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average rate of return

volatility

probability

risk premium

real returns

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Question 4

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arithmetic nominal return

geometric real return

normal distribution

variance

risk premium

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Question 5

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arithmetic

standard

variant

geometric

real

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Question 6

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arithmetic

standard

variant

geometric

real

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Question 7

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riskless market

evenly distributed market

zero volatility market

Blume's market

efficient capital market

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Question 8

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Efficient markets limit competition.

Security prices in efficient markets remain steady as new information becomes available.

Mispriced securities are common in efficient markets.

All securities in an efficient market are zero net present value investments.

Profits are removed as a market incentive when markets become efficient.

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Question 9

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The dividend yield is expressed as a percentage of the selling price.

The capital gain would have been less had Stacy not received the dividends.

The total dollar return per share is $3.

The capital gains yield is positive.

The dividend yield is greater than the capital gains yield.

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Question 10

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next year's annual dividend divided by today's stock price

this year's annual dividend divided by today's stock price

this year's annual dividend divided by next year's expected stock price

next year's annual dividend divided by this year's annual dividend

the increase in next year's dividend over this year's dividend divided by this year's dividend

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was unaffected by the announcement.

increased proportionately with the dividend decrease.

decreased proportionately with the dividend decrease.

decreased by $0.14 per share.

increased by $0.14 per share.

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Question 12

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The capital gains yield includes only realized capital gains.

An increase in an unrealized capital gain will increase the capital gains yield.

The capital gains yield must be either positive or equal to zero.

The capital gains yield is expressed as a percentage of the sales price.

The capital gains yield represents the total return earned by an investor.

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Question 13

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I)The capital gains yield can be positive,negative,or zero.

II)The dividend yield can be positive,negative,or zero.

III)The total return can be positive,negative,or zero.

IV)Neither the dividend yield nor the total return can be negative.

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I only

I and II only

I and III only

I and IV only

IV only

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multiplied by (1 + inflation rate).

plus the inflation rate.

minus the inflation rate.

divided by (1 + inflation rate).

divided by (1 - inflation rate).

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greater than

equal to

less than

greater than or equal to

unrelated to

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Question 16

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500 newest corporations in the U.S.

firms whose stock trades OTC.

smallest twenty percent of the firms listed on the NYSE.

smallest twenty-five percent of the firms listed on NASDAQ.

firms whose stock is listed on NASDAQ.

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Question 17

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U.S. Treasury bill returns never exceeded a 9 percent return in any one year during the period.

U.S. Treasury bills provided a positive rate of return each and every year during the period.

Inflation equaled or exceeded the return on U.S. Treasury bills every year during the period.

Long-term government bonds outperformed U.S. Treasury bills every year during the period.

National deflation occurred at least once every decade during the period.

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Question 18

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U.S. Treasury bills

large company stocks

small company stocks

long-term corporate bonds

long-term government bonds

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Question 19

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long-term government bonds

small company stocks

large company stocks

long-term corporate bonds

U.S. Treasury bills

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Question 20

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long-term corporate bonds

large-company stocks

intermediate-term government bonds

U.S. Treasury bills

small-company stocks

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