Bài test tiếng Anh ngành ngân hàng và đáp án phần 7

If the expected return of a bet, which is based on a coin toss, is $15, then that means that the outcome of the bet will be a $15 cash inflow to the person making the bet.A True B False

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Parrino, 2e Test Bank, Chapter 7

Format: True/False

Learning Objective: LO 3

Level of Difficulty: Easy

1 Whenever the outcome of an event has a number of different possibilities that have equal probability of occurrence, then the expected value of the outcome is equal to the simple average of the individual events

2 The variance of a distribution can be a negative value

3 The standard deviation of a distribution can be a negative value

4 The capital appreciation component of a stock's return considers the increase in price of

a stock divided by the beginning of period price of the stock

A) True

B) False

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Ans: A

Format: True/False

Level of Difficulty: Medium

5 The capital appreciation component of a stock's return considers the increase in price of

a stock divided by the end of period price of the stock

6 If the expected return of a bet, which is based on a coin toss, is $15, then that means that the outcome of the bet will be a $15 cash inflow to the person making the bet.A) True

B) False

Ans: B

Format: True/False

7 The normal distribution is completely described by its mean and standard deviation where 50 percent of the distribution's probability is less than the mean and 50 percent greater than the mean

A) True

B) False

Ans: A

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Format: True/False

8 The variance is denominated in squared units, whereas the standard deviation is

denominated in the same units as the expected value

9 If the price of an asset has not increased or decreased since the original purchase of the asset, then the total return of the asset (if no dividends were paid during the period) is equal to the capital appreciation component return

10 The income component of return for a common stock comes from the dividend cash flow stream

11 If the capital appreciation return from owning a stock is positive, then the total return from owning the same stock can be negative

A) True

B) False

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Ans: B

Format: True/False

12 In order for the total return of a stock to be equal to –100 percent, the income return component for that stock must be zero

13 The best measure of risk within an investment is its variance

14 Robert paid $100 for a stock one year ago The total return on the stock was 10 percent.Therefore, the stock must be selling for $110 today

15 You have placed a wager such that you will either receive nothing if you lose the bet or you will receive $10 if you win the bet If the expected cash receipt of the wager is $9, then there is a 100 percent probability that you will win the wager

A) True

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B) False

Ans: B

Format: True/False

16 The variance is equal to the square root of the standard deviation

17 If you are calculating the variance and standard deviation of returns for a stock, the variance will always be larger than the standard deviation

18 The appropriate measure of risk for a diversified portfolio is beta

19 The coefficient of variation divides the variance of the returns of an asset by the expected return of that asset

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B) False

Ans: B

Format: True/False

20 The coefficient of variation is a good measure of the amount of risk that an asset will contribute to a diversified portfolio of assets

21 If you are building a portfolio, then you desire assets that have a correlation coefficient

22 If the returns for two assets have a correlation coefficient of one, then there are no

benefits of diversification by combining these assets in a two-asset portfolio.

A) True

B) False

Ans: A

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Format: True/False

23 Utilizing the fact that two or more asset values do not always move in the same

direction at the same time in order to reduce the risk of a portfolio is called

24 If you are trying to determine whether to purchase Security A or Security B as the only holding in your portfolio, then you can consider the coefficient of variation in order to understand the risk-return relationship of the individual securities

25 The coefficient of variation is useful when deciding which individual stocks to add to your diversified portfolio

26 If two assets with return correlation coefficients less than one make up a portfolio, then the portfolio does not take advantage of any diversification benefits

A) True

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Ans: B

Format: True/False

27 If the covariance between the returns of two assets is equal to zero, then the correlation coefficient must also be zero

28 If the distribution of returns for an asset has a variance of zero, then covariance of returns between that asset and the returns any other asset must equal zero

29 The expected return of the market portfolio is equal to the market risk premium

30 If you were to completely diversify your portfolio by purchasing a portion of every asset in the investment universe, then the expected return of your portfolio is equal to the risk-free rate

A) True

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B) False

Ans: B

Format: True/False

31 The market risk-premium is equal to expected return on the market portfolio

32 If you know the risk-free rate, the market risk-premium, and the beta of a stock, then using the CAPM you will be able to calculate the expected rate of return for the stock.A) True

B) False

Ans: A

Format: True/False

33 The market risk-premium is equal to the expected return on the market less the risk-freerate of return

A) True

B) False

Ans: A

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Format: True/False

34 Given the historical information in the chapter, the beta of a small stock should be greater than the beta of a corporate bond

35 Complete diversification means that the portfolio is no longer subject to market risk.A) True

B) False

Ans: B

Format: Multiple Choice

36 The expected return for a portfolio without borrowing

A) should never be less than the expected return of the asset with lowest expected return

B) should never be greater than the expected return of the asset with highest

expected return

C) may not be an event with even a positive probability of occurrence

D) All of the above

Ans: D

37 In a game of chance, the probability of winning a $50 prize is 40 percent, and the probability of winning a $100 prize is 60 percent What is the expected value of a prize

in the game?

A) $50

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38 In a game of chance, the probability of winning a $50 is 40 percent and the probability

of losing a $50 prize is 60 percent What is the expected value of a prize in the game?A) –$10

39 Which of the following is the best measure of the systematic risk in a portfolio?

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40 Use the following table to calculate the expected return for the asset

41 Use the following table to calculate the expected return for the asset

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42 The expected return for the asset below is 18.75 percent If the return distribution for the asset is described as in the following table, what is the variance for the asset's returns?

43 The expected return for the asset shown in the following table is 18.75 percent If the return distribution for the asset is described as below, what is the standard deviation for the asset's returns?

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{ (0.25)(0.10 – 0.1875)2 + (0.5)(0.2 – 0.1875) 2 + (0.25)(0.25 – 0.1875) 2 }1/2 = 0.054486

44 If you are dealing with percentage returns, then which of the following is generally true?

A) The variance of the return distribution is generally smaller than the standard deviation

B) The variance of the return distribution is generally larger than the standard deviation

C) The variance of the return distribution is measured in the same units as expected return

D) None of the above is generally true

Ans: D

45 The return distribution for an asset is as shown in the following table What are the missing values if the expected return is 10 percent?

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46 The expected return for Stock Z is 30 percent If we know the following information about Stock Z, then what return will it produce in the Lukewarm state of the world?

47 The expected return for Stock V is 24.5 percent If we know the following information about Stock Z, then what is the probability of the Dynamite state of the world

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0.2 + 0.7 + X = 1.0 ===> X = 0.1 or 10%

48 Ahmet purchased a stock for $45 one year ago The stock is now worth $65 During theyear, the stock paid a dividend of $2.50 What is the total return to Ahmet from owning the stock? (Round your answer to the nearest whole percent.)

49 Julio purchased a stock one year ago for $27 The stock is now worth $32, and the total return to Julio for owning the stock was 37 percent What is the dollar amount of dividends that he received for owning the stock during the year?

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50 Francis purchased a stock one year ago for $20, and it is now worth $24 The stock paid

a dividend of $3 during the year What was the stock's rate of return from capital appreciation during the year? (Round your answer to the nearest percent.)

51 Gwen purchased a stock one year ago for $25, and it is now worth $31 The stock paid

a dividend of $1.50 during the year What was the stock's rate of return income during the year? (Round your answer to the nearest percent.)

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52 Gunther earned a 62.5 percent return on a stock that he purchased one year ago The stock is now worth $12, and he received a dividend of $1 during the year How much did Gunther originally pay for the stock?

53 Moshe purchased a stock for $30 last year He found out today that he had a –100 percent return on his investment Which of the following must be true?

A) The stock is worth $30 today

B) The stock is worth $0 today

C) The stock paid no dividends during the year

D) Both b and c must be true

Ans: D

54 Babs purchased a piece of real estate last year for $85,000 The real estate is now worth

$102,000 If Babs needs to have a total return of 25 percent during the year, then what

is the dollar amount of income that she needed to have to reach her objective?

A) $3,750

B) $4,250

C) $4,750

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55 Genaro needs to capture a return of 40 percent for his one-year investment in a

property He believes that he can sell the property at the end of the year for $150,000 and that the property will provide him with rental income of $25,000 What is the maximum amount that Genaro should be willing to pay for the property?

56 Books Brothers stock was priced at $15 per share two years ago The stock sold for $13last year and now it sells for $18 What was the total return for owning Books Brothers stock during the most recent year? Assume that no dividends were paid and round to thenearest percent

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57 Serox stock was selling for $20 two years ago The stock sold for $25 one year ago, and

it is currently selling for $28 Serox pays a $1.10 dividend per year What was the rate

of return for owning Serox in the most recent year? (Round to the nearest percent.)A) 12%

58 You have observed that the average size of a particular goldfish is 1.5 inches long The standard deviation of the size of the goldfish is 0.25 inches What is the size of a

goldfish such that 95 percent of the goldfish are smaller? Assume a normal distribution for the size of goldfish

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59 You know that the average college student eats 0.75 pounds of food at lunch If the standard deviation of that eating is 0.2 pounds of food, then what is the total amount of food that a cafeteria should have on hand to be 95percent confident that it will not run out of food when feeding 50 college students

60 If a random variable is drawn from a normal distribution, what is the probability that the random variable is larger than 1.96 standard deviations larger than the mean?A) 1.25%

61 If a random variable is drawn from a normal distribution, what is the probability that the random variable is larger than 1.96 standard deviations below the mean?

A) 95.00%

B) 96.25%

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D) 98.75%

Ans: C

62 Niles is making an investment with an expected return of 12 percent If the standard deviation of the return is 4.5 percent, and if Niles is investing $100,000, then what dollar amount is Niles 95 percent sure that he will have at the end of the year?A) $100,000.00

63 Which of the following investment classes had the greatest average return based on recent historical data?

A) Intermediate-Term Government Bonds

B) Long-Term Government Bonds

C) Large U.S Stocks

D) Small U.S Stocks

Ans: D

64 Which of the following investment classes had the greatest variability in returns for recent historical data?

A) Intermediate-Term Government Bonds

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