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Multiple Choice Quiz
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1

Over the past 200 years, U.S. Treasury bills have outperformed gold.
A)True
B)False
2

The 95 percent probability range is equal to the mean plus or minus three standard deviations.
A)True
B)False
3

You purchased a stock one year ago at $22 a share. The stock pays a quarterly dividend of $1.20. Today, you sold the stock for $24.50 a share. What is your total dollar return?
A)$1.20
B)$2.50
C)$3.70
D)$4.90
E)$7.30
4

One year ago, you purchased a stock for $31.30 a share and have received $.75 each quarter as a dividend payment. Today, the stock is selling at $29.40 a share. What is your capital gains yield?
A)-6.46 percent
B)-6.07 percent
C)-3.91 percent
D)3.51 percent
E)3.74 percent
5

One dollar invested in U.S. Treasury bills at the end of 1925 was worth approximately _____ at the end of 2005.
A)$10.98
B)$18.40
C)$42.30
D)$51.60
E)$70.85
6

Which one of the following never had a negative annual return during the period 1926- 2005?
A)large-company stocks
B)Consumer Price Index
C)U.S. Treasury bills
D)long-term government bonds
E)small-company stocks
7

Small-company stocks have the _____ and the _____ for the period 1926-2005.
A)highest average return; lowest risk premium
B)lowest average return; greatest volatility
C)highest average return; lowest volatility
D)lowest average return; highest risk premium
E)highest average return; greatest volatility
8

The average squared difference between the actual annual returns and the average return for a period of time is measured by the:
A)variance.
B)risk premium.
C)risk-free rate.
D)standard deviation.
E)geometric average return.
9

Miller Brothers Hardware has common stock outstanding which has produced annual returns of 6, 14, -3, 11, and 5 percent over the past five years. What is the variance of these returns?
A).003287
B).003384
C).003391
D).004230
E).004712
10

Which one of the following categories of investments would you expect to have the highest standard deviation of returns over a long period of time?
A)U.S. Treasury bills
B)large-company stocks
C)short-term corporate bonds
D)long-term corporate bonds
E)small-company stocks





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