投资学题库Chap005

51COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATIONCHAPTER05RISK,RETURN,ANDTHEHISTORICALRECORDMULTIPLECHOICEQUESTIONS1OVERTHEPASTYEARYOUEARNEDANOMINALRATEOFINTERESTOF10ONYOURMONEYTHEINFLATIONRATEWAS5OVERTHESAMEPERIODTHEEXACTACTUALGROWTHRATEOFYOURPURCHASINGPOWERWASA155B100C50D48E1502OVERTHEPASTYEARYOUEARNEDANOMINALRATEOFINTERESTOF8ONYOURMONEYTHEINFLATIONRATEWAS4OVERTHESAMEPERIODTHEEXACTACTUALGROWTHRATEOFYOURPURCHASINGPOWERWASA155B100C38D48E15052COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION3AYEARAGO,YOUINVESTED1,000INASAVINGSACCOUNTTHATPAYSANANNUALINTERESTRATEOF9WHATISYOURAPPROXIMATEANNUALREALRATEOFRETURNIFTHERATEOFINFLATIONWAS4OVERTHEYEARA5B10C7D34AYEARAGO,YOUINVESTED10,000INASAVINGSACCOUNTTHATPAYSANANNUALINTERESTRATEOF5WHATISYOURAPPROXIMATEANNUALREALRATEOFRETURNIFTHERATEOFINFLATIONWAS35OVERTHEYEARA15B10C7D3ENONEOFTHEOPTIONS5IFTHEANNUALREALRATEOFINTERESTIS5ANDTHEEXPECTEDINFLATIONRATEIS4,THENOMINALRATEOFINTERESTWOULDBEAPPROXIMATELYA1B9C20D1553COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION6IFTHEANNUALREALRATEOFINTERESTIS25ANDTHEEXPECTEDINFLATIONRATEIS37,THENOMINALRATEOFINTERESTWOULDBEAPPROXIMATELYA37B62C25D127YOUPURCHASEDASHAREOFSTOCKFOR20ONEYEARLATERYOURECEIVED1ASADIVIDENDANDSOLDTHESHAREFOR29WHATWASYOURHOLDINGPERIODRETURNA45B50C5D40ENONEOFTHEOPTIONS8YOUPURCHASEDASHAREOFSTOCKFOR68ONEYEARLATERYOURECEIVED300ASADIVIDENDANDSOLDTHESHAREFOR7450WHATWASYOURHOLDINGPERIODRETURNA125B140C136D11854COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION9WHICHOFTHEFOLLOWINGDETERMINESTHELEVELOFREALINTERESTRATESITHESUPPLYOFSAVINGSBYHOUSEHOLDSANDBUSINESSFIRMSIITHEDEMANDFORINVESTMENTFUNDSIIITHEGOVERNMENTSNETSUPPLYAND/ORDEMANDFORFUNDSAIONLYBIIONLYCIANDIIONLYDI,II,ANDIII10WHICHOFTHEFOLLOWINGSTATEMENTSISARETRUEITHEREALRATEOFINTERESTISDETERMINEDBYTHESUPPLYANDDEMANDFORFUNDSIITHEREALRATEOFINTERESTISDETERMINEDBYTHEEXPECTEDRATEOFINFLATIONIIITHEREALRATEOFINTERESTCANBEAFFECTEDBYACTIONSOFTHEFEDIVTHEREALRATEOFINTERESTISEQUALTOTHENOMINALINTERESTRATEPLUSTHEEXPECTEDRATEOFINFLATIONAIANDIIONLYBIANDIIIONLYCIIIANDIVONLYDIIANDIIIONLYEI,II,III,ANDIVONLY55COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION11WHICHOFTHEFOLLOWINGSTATEMENTSISARETRUEAINFLATIONHASNOEFFECTONTHENOMINALRATEOFINTERESTBTHEREALIZEDNOMINALRATEOFINTERESTISALWAYSGREATERTHANTHEREALRATEOFINTERESTCCERTIFICATESOFDEPOSITOFFERAGUARANTEEDREALRATEOFINTERESTDNONEOFTHEOPTIONSISTRUE12OTHERTHINGSEQUAL,ANINCREASEINTHEGOVERNMENTBUDGETDEFICITADRIVESTHEINTERESTRATEDOWNBDRIVESTHEINTERESTRATEUPCMIGHTNOTHAVEANYEFFECTONINTERESTRATESDINCREASESBUSINESSPROSPECTS13CETERISPARIBUS,ADECREASEINTHEDEMANDFORLOANABLEFUNDSADRIVESTHEINTERESTRATEDOWNBDRIVESTHEINTERESTRATEUPCMIGHTNOTHAVEANYEFFECTONINTERESTRATESDRESULTSFROMANINCREASEINBUSINESSPROSPECTSANDADECREASEINTHELEVELOFSAVINGS56COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION14THEHOLDINGPERIODRETURNHPRONASHAREOFSTOCKISEQUALTOATHECAPITALGAINYIELDDURINGTHEPERIOD,PLUSTHEINFLATIONRATEBTHECAPITALGAINYIELDDURINGTHEPERIOD,PLUSTHEDIVIDENDYIELDCTHECURRENTYIELD,PLUSTHEDIVIDENDYIELDDTHEDIVIDENDYIELD,PLUSTHERISKPREMIUMETHECHANGEINSTOCKPRICE15HISTORICALRECORDSREGARDINGRETURNONSTOCKS,TREASURYBONDS,ANDTREASURYBILLSBETWEEN1926AND2012SHOWTHATASTOCKSOFFEREDINVESTORSGREATERRATESOFRETURNTHANBONDSANDBILLSBSTOCKRETURNSWERELESSVOLATILETHANTHOSEOFBONDSANDBILLSCBONDSOFFEREDINVESTORSGREATERRATESOFRETURNTHANSTOCKSANDBILLSDBILLSOUTPERFORMEDSTOCKSANDBONDSETREASURYBILLSALWAYSOFFEREDARATEOFRETURNGREATERTHANINFLATION16IFTHEINTERESTRATEPAIDBYBORROWERSANDTHEINTERESTRATERECEIVEDBYSAVERSACCURATELYREFLECTTHEREALIZEDRATEOFINFLATION,ABORROWERSGAINANDSAVERSLOSEBSAVERSGAINANDBORROWERSLOSECBOTHBORROWERSANDSAVERSLOSEDNEITHERBORROWERSNORSAVERSGAINNORLOSEEBOTHBORROWERSANDSAVERSGAIN57COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION17YOUHAVEBEENGIVENTHISPROBABILITYDISTRIBUTIONFORTHEHOLDINGPERIODRETURNFORKMPSTOCKWHATISTHEEXPECTEDHOLDINGPERIODRETURNFORKMPSTOCKA1040B932C1163D1154E108818YOUHAVEBEENGIVENTHISPROBABILITYDISTRIBUTIONFORTHEHOLDINGPERIODRETURNFORKMPSTOCKWHATISTHEEXPECTEDSTANDARDDEVIATIONFORKMPSTOCKA691B813C779D725E88558COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION19YOUHAVEBEENGIVENTHISPROBABILITYDISTRIBUTIONFORTHEHOLDINGPERIODRETURNFORKMPSTOCKWHATISTHEEXPECTEDVARIANCEFORKMPSTOCKA6604B6996C7704D6372E784520IFTHENOMINALRETURNISCONSTANT,THEAFTERTAXREALRATEOFRETURNADECLINESASTHEINFLATIONRATEINCREASESBINCREASESASTHEINFLATIONRATEINCREASESCDECLINESASTHEINFLATIONRATEDECLINESDINCREASESASTHEINFLATIONRATEDECREASESEDECLINESASTHEINFLATIONRATEINCREASESANDINCREASESASTHEINFLATIONRATEDECREASES59COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION21THERISKPREMIUMFORCOMMONSTOCKSACANNOTBEZERO,FORINVESTORSWOULDBEUNWILLINGTOINVESTINCOMMONSTOCKSBMUSTALWAYSBEPOSITIVE,INTHEORYCISNEGATIVE,ASCOMMONSTOCKSARERISKYDCANNOTBEZERO,FORINVESTORSWOULDBEUNWILLINGTOINVESTINCOMMONSTOCKSANDMUSTALWAYSBEPOSITIVE,INTHEORYECANNOTBEZERO,FORINVESTORSWOULDBEUNWILLINGTOINVESTINCOMMONSTOCKSANDISNEGATIVE,ASCOMMONSTOCKSARERISKY22IFAPORTFOLIOHADARETURNOF18,THERISKFREEASSETRETURNWAS5,ANDTHESTANDARDDEVIATIONOFTHEPORTFOLIOSEXCESSRETURNSWAS34,THERISKPREMIUMWOULDBEA13B18C49D12E2923YOUPURCHASEASHAREOFBOEINGSTOCKFOR90ONEYEARLATER,AFTERRECEIVINGADIVIDENDOF3,YOUSELLTHESTOCKFOR92WHATWASYOURHOLDINGPERIODRETURNA444B222C333D556ENONEOFTHEOPTIONS510COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION24TOYOTASTOCKHASTHEFOLLOWINGPROBABILITYDISTRIBUTIONOFEXPECTEDPRICESONEYEARFROMNOWIFYOUBUYTOYOTATODAYFOR55ANDITWILLPAYADIVIDENDDURINGTHEYEAROF4PERSHARE,WHATISYOUREXPECTEDHOLDINGPERIODRETURNONTOYOTAA1772B1889C1791D181825WHICHOFTHEFOLLOWINGFACTORSWOULDNOTBEEXPECTEDTOAFFECTTHENOMINALINTERESTRATEATHESUPPLYOFLOANABLEFUNDSBTHEDEMANDFORLOANABLEFUNDSCTHECOUPONRATEONPREVIOUSLYISSUEDGOVERNMENTBONDSDTHEEXPECTEDRATEOFINFLATIONEGOVERNMENTSPENDINGANDBORROWING511COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION26IFAPORTFOLIOHADARETURNOF11,THERISKFREEASSETRETURNWAS6,ANDTHESTANDARDDEVIATIONOFTHEPORTFOLIOSEXCESSRETURNSWAS25,THERISKPREMIUMWOULDBEA14B6C35D21E527INWORDS,THEREALRATEOFINTERESTISAPPROXIMATELYEQUALTOATHENOMINALRATEMINUSTHEINFLATIONRATEBTHEINFLATIONRATEMINUSTHENOMINALRATECTHENOMINALRATETIMESTHEINFLATIONRATEDTHEINFLATIONRATEDIVIDEDBYTHENOMINALRATEETHENOMINALRATEPLUSTHEINFLATIONRATE28IFTHEFEDERALRESERVELOWERSTHEDISCOUNTRATE,CETERISPARIBUS,THEEQUILIBRIUMLEVELSOFFUNDSLENTWILL_ANDTHEEQUILIBRIUMLEVELOFREALINTERESTRATESWILL_AINCREASEINCREASEBINCREASEDECREASECDECREASEINCREASEDDECREASEDECREASEEREVERSEDIRECTIONFROMTHEIRPREVIOUSTRENDSREVERSEDIRECTIONFROMTHEIRPREVIOUSTRENDS512COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION29WHATHASBEENTHERELATIONSHIPBETWEENTBILLRATESANDINFLATIONRATESSINCETHE1980SATHETBILLRATEWASSOMETIMESHIGHERTHANANDSOMETIMESLOWERTHANTHEINFLATIONRATEBTHETBILLRATEHASEQUALEDTHEINFLATIONRATEPLUSACONSTANTPERCENTAGECTHEINFLATIONRATEHASEQUALEDTHETBILLRATEPLUSACONSTANTPERCENTAGEDTHETBILLRATEHASBEENHIGHERTHANTHEINFLATIONRATEALMOSTTHEENTIREPERIODETHETBILLRATEHASBEENLOWERTHANTHEINFLATIONRATEALMOSTTHEENTIREPERIOD30“BRACKETCREEP“HAPPENSWHENATAXLIABILITIESAREBASEDONREALINCOMEANDTHEREISANEGATIVEINFLATIONRATEBTAXLIABILITIESAREBASEDONREALINCOMEANDTHEREISAPOSITIVEINFLATIONRATECTAXLIABILITIESAREBASEDONNOMINALINCOMEANDTHEREISANEGATIVEINFLATIONRATEDTAXLIABILITIESAREBASEDONNOMINALINCOMEANDTHEREISAPOSITIVEINFLATIONRATEETOOMANYPECULIARPEOPLEMAKETHEIRWAYINTOTHEHIGHESTTAXBRACKET31THEHOLDINGPERIODRETURNHPRFORASTOCKISEQUALTOATHEREALYIELDMINUSTHEINFLATIONRATEBTHENOMINALYIELDMINUSTHEREALYIELDCTHECAPITALGAINSYIELDMINUSTHETAXRATEDTHECAPITALGAINSYIELDMINUSTHEDIVIDENDYIELDETHEDIVIDENDYIELDPLUSTHECAPITALGAINSYIELD513COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION32YOUHAVEBEENGIVENTHISPROBABILITYDISTRIBUTIONFORTHEHOLDINGPERIODRETURNFORCHEESE,INCSTOCKASSUMINGTHATTHEEXPECTEDRETURNONCHEESESSTOCKIS1435,WHATISTHESTANDARDDEVIATIONOFTHESERETURNSA472B630C438D574ENONEOFTHEOPTIONS33ANINVESTORPURCHASEDABOND45DAYSAGOFOR985HERECEIVED15ININTERESTANDSOLDTHEBONDFOR980WHATISTHEHOLDINGPERIODRETURNONHISINVESTMENTA102B050C192D001514COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION34ANINVESTORPURCHASEDABOND63DAYSAGOFOR980HERECEIVED17ININTERESTANDSOLDTHEBONDFOR987WHATISTHEHOLDINGPERIODRETURNONHISINVESTMENTA152B245C192D26835OVERTHEPASTYEARYOUEARNEDANOMINALRATEOFINTERESTOF8ONYOURMONEYTHEINFLATIONRATEWAS35OVERTHESAMEPERIODTHEEXACTACTUALGROWTHRATEOFYOURPURCHASINGPOWERWASA1555B435C502D481E150436OVERTHEPASTYEARYOUEARNEDANOMINALRATEOFINTERESTOF14ONYOURMONEYTHEINFLATIONRATEWAS2OVERTHESAMEPERIODTHEEXACTACTUALGROWTHRATEOFYOURPURCHASINGPOWERWASA1176B1600C1502D1432515COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION37OVERTHEPASTYEARYOUEARNEDANOMINALRATEOFINTERESTOF125ONYOURMONEYTHEINFLATIONRATEWAS26OVERTHESAMEPERIODTHEEXACTACTUALGROWTHRATEOFYOURPURCHASINGPOWERWASA915B990C965D105238AYEARAGO,YOUINVESTED1,000INASAVINGSACCOUNTTHATPAYSANANNUALINTERESTRATEOF6WHATISYOURAPPROXIMATEANNUALREALRATEOFRETURNIFTHERATEOFINFLATIONWAS2OVERTHEYEARA4B2C6D339AYEARAGO,YOUINVESTED10,000INASAVINGSACCOUNTTHATPAYSANANNUALINTERESTRATEOF3WHATISYOURAPPROXIMATEANNUALREALRATEOFRETURNIFTHERATEOFINFLATIONWAS4OVERTHEYEARA1B1C7D3516COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION40AYEARAGO,YOUINVESTED2,500INASAVINGSACCOUNTTHATPAYSANANNUALINTERESTRATEOF57WHATISYOURAPPROXIMATEANNUALREALRATEOFRETURNIFTHERATEOFINFLATIONWAS16OVERTHEYEARA41B25C29D1641AYEARAGO,YOUINVESTED2,500INASAVINGSACCOUNTTHATPAYSANANNUALINTERESTRATEOF25WHATISYOURAPPROXIMATEANNUALREALRATEOFRETURNIFTHERATEOFINFLATIONWAS34OVERTHEYEARA09B09C59D3442AYEARAGO,YOUINVESTED12,000INANINVESTMENTTHATPRODUCEDARETURNOF18WHATISYOURAPPROXIMATEANNUALREALRATEOFRETURNIFTHERATEOFINFLATIONWAS2OVERTHEYEARA18B2C16D15517COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION43IFTHEANNUALREALRATEOFINTERESTIS35ANDTHEEXPECTEDINFLATIONRATEIS25,THENOMINALRATEOFINTERESTWOULDBEAPPROXIMATELYA35B25C1D68ENONEOFTHEOPTIONS44IFTHEANNUALREALRATEOFINTERESTIS25ANDTHEEXPECTEDINFLATIONRATEIS34,THENOMINALRATEOFINTERESTWOULDBEAPPROXIMATELYA49B09C09D7ENONEOFTHEOPTIONS45IFTHEANNUALREALRATEOFINTERESTIS4ANDTHEEXPECTEDINFLATIONRATEIS3,THENOMINALRATEOFINTERESTWOULDBEAPPROXIMATELYA4B3C1D5ENONEOFTHEOPTIONS518COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION46YOUPURCHASEDASHAREOFSTOCKFOR12ONEYEARLATERYOURECEIVED025ASADIVIDENDANDSOLDTHESHAREFOR1292WHATWASYOURHOLDINGPERIODRETURNA975B1065C1175D1125ENONEOFTHEOPTIONS47YOUPURCHASEDASHAREOFSTOCKFOR120ONEYEARLATERYOURECEIVED182ASADIVIDENDANDSOLDTHESHAREFOR136WHATWASYOURHOLDINGPERIODRETURNA1567B2212C1885D1324ENONEOFTHEOPTIONS48YOUPURCHASEDASHAREOFSTOCKFOR65ONEYEARLATERYOURECEIVED237ASADIVIDENDANDSOLDTHESHAREFOR63WHATWASYOURHOLDINGPERIODRETURNA057B02550C089D163ENONEOFTHEOPTIONS519COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION49YOUHAVEBEENGIVENTHISPROBABILITYDISTRIBUTIONFORTHEHOLDINGPERIODRETURNFORASTOCKWHATISTHEEXPECTEDHOLDINGPERIODRETURNFORTHESTOCKA1167B833C956D124ENONEOFTHEOPTIONS50YOUHAVEBEENGIVENTHISPROBABILITYDISTRIBUTIONFORTHEHOLDINGPERIODRETURNFORASTOCKWHATISTHEEXPECTEDSTANDARDDEVIATIONFORTHESTOCKA207B996C704D144ENONEOFTHEOPTIONS520COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION51YOUHAVEBEENGIVENTHISPROBABILITYDISTRIBUTIONFORTHEHOLDINGPERIODRETURNFORASTOCKWHATISTHEEXPECTEDVARIANCEFORTHESTOCKA14207B18996C17704D12817ENONEOFTHEOPTIONS52WHICHOFTHEFOLLOWINGMEASURESOFRISKBESTHIGHLIGHTSTHEPOTENTIALLOSSFROMEXTREMENEGATIVERETURNSASTANDARDDEVIATIONBVARIANCECUPPERPARTIALSTANDARDDEVIATIONDVALUEATRISKVARENONEOFTHEOPTIONS521COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION53OVERTHEPASTYEARYOUEARNEDANOMINALRATEOFINTERESTOF36ONYOURMONEYTHEINFLATIONRATEWAS31OVERTHESAMEPERIODTHEEXACTACTUALGROWTHRATEOFYOURPURCHASINGPOWERWASA36B31C048D6754AYEARAGO,YOUINVESTED1,000INASAVINGSACCOUNTTHATPAYSANANNUALINTERESTRATEOF43WHATISYOURAPPROXIMATEANNUALREALRATEOFRETURNIFTHERATEOFINFLATIONWAS3OVERTHEYEARA43B13C73D3ENONEOFTHEOPTIONS55IFTHEANNUALREALRATEOFINTERESTIS35ANDTHEEXPECTEDINFLATIONRATEIS35,THENOMINALRATEOFINTERESTWOULDBEAPPROXIMATELYA0B35C1225D7522COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION56YOUPURCHASEDASHAREOFCSCOSTOCKFOR20ONEYEARLATERYOURECEIVED2ASADIVIDENDANDSOLDTHESHAREFOR31WHATWASYOURHOLDINGPERIODRETURNA45B50C60D40ENONEOFTHEOPTIONS57YOUHAVEBEENGIVENTHISPROBABILITYDISTRIBUTIONFORTHEHOLDINGPERIODRETURNFORGMSTOCKWHATISTHEEXPECTEDHOLDINGPERIODRETURNFORGMSTOCKA104B114C124D134E144523COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION58YOUHAVEBEENGIVENTHISPROBABILITYDISTRIBUTIONFORTHEHOLDINGPERIODRETURNFORGMSTOCKWHATISTHEEXPECTEDSTANDARDDEVIATIONFORGMSTOCKA1691B1613C1379D1525E148759YOUHAVEBEENGIVENTHISPROBABILITYDISTRIBUTIONFORTHEHOLDINGPERIODRETURNFORGMSTOCKWHATISTHEEXPECTEDVARIANCEFORGMSTOCKA20000B22104C24637D1487E1613524COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION60YOUPURCHASEASHAREOFCATSTOCKFOR90ONEYEARLATER,AFTERRECEIVINGADIVIDENDOF4,YOUSELLTHESTOCKFOR97WHATWASYOURHOLDINGPERIODRETURNA1444B1222C1333D55661WHENCOMPARINGINVESTMENTSWITHDIFFERENTHORIZONS,THE_PROVIDESTHEMOREACCURATECOMPARISONAARITHMETICAVERAGEBEFFECTIVEANNUALRATECAVERAGEANNUALRETURNDHISTORICALANNUALAVERAGE62ANNUALPERCENTAGERATESAPRSARECOMPUTEDUSINGASIMPLEINTERESTBCOMPOUNDINTERESTCEITHERSIMPLEINTERESTORCOMPOUNDINTERESTDBESTESTIMATESOFEXPECTEDREALCOSTSENONEOFTHEOPTIONS525COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION63ANINVESTMENTPROVIDESA2RETURNSEMIANNUALLY,ITSEFFECTIVEANNUALRATEISA2B4C402D404ENONEOFTHEOPTIONS64IFANINVESTMENTPROVIDESA125RETURNQUARTERLY,ITSEFFECTIVEANNUALRATEISA523B509C402D40465IFANINVESTMENTPROVIDESA078RETURNMONTHLY,ITSEFFECTIVEANNUALRATEISA936B963C1002D977526COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION66IFANINVESTMENTPROVIDESA3RETURNSEMIANNUALLY,ITSEFFECTIVEANNUALRATEISA3B6C606D60967IFANINVESTMENTPROVIDESA21RETURNQUARTERLY,ITSEFFECTIVEANNUALRATEISA21B84C856D86768SKEWNESSISAMEASUREOFAHOWFATTHETAILSOFADISTRIBUTIONAREBTHEDOWNSIDERISKOFADISTRIBUTIONCTHENORMALITYOFADISTRIBUTIONDTHEDIVIDENDYIELDOFTHEDISTRIBUTIONENONEOFTHEOPTIONS527COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION69KURTOSISISAMEASUREOFAHOWFATTHETAILSOFADISTRIBUTIONAREBTHEDOWNSIDERISKOFADISTRIBUTIONCTHENORMALITYOFADISTRIBUTIONDTHEDIVIDENDYIELDOFTHEDISTRIBUTIONEHOWFATTHETAILSOFADISTRIBUTIONAREANDTHENORMALITYOFADISTRIBUTION70WHENADISTRIBUTIONISPOSITIVELYSKEWED,ASTANDARDDEVIATIONOVERESTIMATESRISKBSTANDARDDEVIATIONCORRECTLYESTIMATESRISKCSTANDARDDEVIATIONUNDERESTIMATESRISKDTHETAILSAREFATTERTHANINANORMALDISTRIBUTION71WHENADISTRIBUTIONISNEGATIVELYSKEWED,ASTANDARDDEVIATIONOVERESTIMATESRISKBSTANDARDDEVIATIONCORRECTLYESTIMATESRISKCSTANDARDDEVIATIONUNDERESTIMATESRISKDTHETAILSAREFATTERTHANINANORMALDISTRIBUTION528COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION72IFADISTRIBUTIONHAS“FATTAILS,“ITEXHIBITSAPOSITIVESKEWNESSBNEGATIVESKEWNESSCAKURTOSISOFZERODKURTOSISEPOSITIVESKEWNESSANDKURTOSIS73IFAPORTFOLIOHADARETURNOF8,THERISKFREEASSETRETURNWAS3,ANDTHESTANDARDDEVIATIONOFTHEPORTFOLIOSEXCESSRETURNSWAS20,THESHARPEMEASUREWOULDBEA008B003C020D011E02574IFAPORTFOLIOHADARETURNOF12,THERISKFREEASSETRETURNWAS4,ANDTHESTANDARDDEVIATIONOFTHEPORTFOLIOSEXCESSRETURNSWAS25,THESHARPEMEASUREWOULDBEA012B004C032D016E025529COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION75IFAPORTFOLIOHADARETURNOF15,THERISKFREEASSETRETURNWAS5,ANDTHESTANDARDDEVIATIONOFTHEPORTFOLIOSEXCESSRETURNSWAS30,THESHARPEMEASUREWOULDBEA020B035C045D033E02576IFAPORTFOLIOHADARETURNOF12,THERISKFREEASSETRETURNWAS4,ANDTHESTANDARDDEVIATIONOFTHEPORTFOLIOSEXCESSRETURNSWAS25,THERISKPREMIUMWOULDBEA8B16C37D21E2977_ISARISKMEASURETHATINDICATESVULNERABILITYTOEXTREMENEGATIVERETURNSAVALUEATRISKBLOWERPARTIALSTANDARDDEVIATIONCSTANDARDDEVIATIONDVALUEATRISKANDLOWERPARTIALSTANDARDDEVIATIONENONEOFTHEOPTIONS530COPYRIGHT2014MCGRAWHILLEDUCATIONALLRIGHTSRESERVEDNOREPRODUCTIONORDISTRIBUTIONWITHOUTTHEPRIORWRITTENCONSENTOFMCGRAWHILLEDUCATION78_ISARISKMEASURETHATINDICATESVULNERABILITYTOEXTREMENEGATIVERETURNSAVALUEATRISKBLOWERPARTIALSTANDARDDEVIATIONCEXPECTEDSHORTFALLDNONEOFTHEOPTIONSEALLOFTHEOPTIONS79THEMOSTCOMMONMEASUREOFL