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FINC 600 Week 3 Practice Quiz

FINC 600 Week 3 Practice Quiz

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Author: Dannie Young
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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%


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