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Trudy Webb

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Part 1 of 1 -

15.0/ 15.0 Points

Question 1 of 15

1.0/ 1.0 Points

Which of the following portfolios have the least risk?

A.A portfolio of Treasury bills

B.A portfolio of long-term United States Government bonds

C.Portfolio of U.S. common stocks of small firms

D.None of the above

Question 2 of 15

1.0/ 1.0 Points

If the average annual rate of return for common stocks is 11.7%, and for treasury bills it is 4.0%, what is the market risk premium?

A.15.8%

B.4.1%

C.7.7%

D.None of the above

Feedback: Average risk premium: 11.7 - 4.0 = 7.7%

Question 3 of 15

1.0/ 1.0 Points

Spill Oil Company's stocks had -8%, 11% and 24% rates of return during the last three years respectively; calculate the average rate of return for the stock.

A.8% per year

B.9% per year

C.11% per year

D.None of the above

Feedback: Average rate of return = (-8 + 11 + 24)/3 = 9%

Question 4 of 15

1.0/ 1.0 Points

Given the following data: risk-free rate = 4%, average risk premium = 7.7%. Calculate the required rate of return:

A.5.6%

B.7.6%

C.11.7%

D.None of the given answers

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