Fundamentals of Investments: Valuation and Management 9th Edition by Bradford Jordan test bank

methods.
Difficulty: 2
Medium
Section: 1.5 More on
Average Returns




 
 41.
Award: 1.00 point
The geometric return on an investment is approximately equal to the arithmetic return:
plus half the standard deviation.
plus half the variance.
minus half the standard deviation.
minus half the variance.
divided by two.
See Section 1.5
References
Multiple Choice Learning Objective:
01-01 How to
calculate the return
on an investment
using different
methods.
Difficulty: 1 Easy Section: 1.5 More on
Average Returns



 

 42.
Award: 1.00 point
Blume's formula is used to:
predict future rates of return.
convert an arithmetic average return into a geometric average return.
convert a geometric average return into an arithmetic average return.
measure past performance in a consistent manner.
compute the historical mean return over a multi-year period.
See Section 1.5
References
Multiple Choice Learning Objective:
01-01 How to
calculate the return
on an investment
using different
methods.
Difficulty: 1 Easy Section: 1.5 More on
Average Returns
 




 43.
Award: 1.00 point
One year ago, you purchased 200 shares of Southern Foods common stock for $39.50 a share.
Today, you sold your shares for $35.40 a share. During this past year, the stock paid $1.36 in
dividends per share. What is your dividend yield on this investment?
3.165%
3.375%
3.443%
3.533%
3.610%
$1.36 / $39.50 = .03443, or 3.443%
References
Multiple Choice Learning Objective:
01-01 How to
calculate the return
on an investment
using different
methods.
Difficulty: 1 Easy Section: 1.1 Returns


 


 44.
Award: 1.00 point
You purchased a stock for $30.43 a share, received a dividend of $.70 per share, and sold the stock
after one year for $30.22 a share. What was your dividend yield on this investment?
2.30%
2.38%
2.45%
2.67%
2.75%
$.70 / $30.43 = .0230, or 2.30%
References
Multiple Choice Learning Objective:
01-01 How to
calculate the return
on an investment
using different
methods.
Difficulty: 1 Easy Section: 1.1 Returns
 




 45.
Award: 1.00 point
One year ago, you purchased 500 shares of stock at a cost of $10,500. The stock paid an annual
dividend of $1.10 per share. Today, you sold those shares for $23.90 each. What is the capital gains
yield on this investment?
9.96%
10.52%
12.49%
13.81%
14.75%
[($23.90 脳 500) 鈭� $10,500)] / $10,500 = .1381, or 13.81 percent
References
Multiple Choice Learning Objective:
01-01 How to
calculate the return
on an investment
using different
methods.
Difficulty: 1 Easy Section: 1.1 Returns



 

 46.
Award: 1.00 point
Today, you sold 800 shares of DeSoto, Inc., for $55.50 a share. You bought the shares one year ago
at a price of $60.02 a share. Over the year, you received a total of $500 in dividends. What is your
capital gains yield on this investment?
鈭�7.53%
鈭�8.14%
鈭�4.86%
8.14%
7.53%
($55.50 鈭� $60.02) / $60.02 = 鈭�.0753, or 鈭�7.53%
References
Multiple Choice Learning Objective:
01-01 How to
calculate the return
on an investment
using different
methods.
Difficulty: 1 Easy Section: 1.1 Returns
 




 47.
Award: 1.00 point
One year ago, you purchased 400 shares of Southern Cotton at $36.20 a share. During the past
year, you received a total of $250 in dividends. Today, you sold your shares for $38.50 a share.
What is your total return on this investment?
7.60%
8.08%
9.69%
11.64%
12.68%
[$38.50 鈭� $36.20 + ($250 / 400)] / $36.20 = .808, or 8.08%
References
Multiple Choice Learning Objective:
01-01 How to
calculate the return
on an investment
using different
methods.
Difficulty: 1 Easy Section: 1.1 Returns

 



 48.
Award: 1.00 point
You purchased a stock for $50.00 a share and resold it one year later. Your total return for the year
was 11.5 percent and the dividend yield was 2.8 percent. At what price did you resell the stock?
$42.78
$50.62
$51.93
$52.08
$54.35
Capital gains yield = 11.5% − 2.8% = 8.7%