Question 1
1. Over the 50-year period of 1960-2010, the stock market as measured by the S&P 500 Index provided an average annual rate of return of approximately 11%.
True
False
4.5 points
Question 2
1. The Capital Asset Pricing Model (CAPM) includes which of the following in its base assumptions?
I and III only
II and IV only
I, II and III only
I, III and IV only
4.5 points
Question 3
1. For the period 2000 through 2009, the average annual return on stocks was
16%.
8%.
-1%.
-50%.
4.5 points
Question 4
1. If stocks earn an average rate of return of 12 %, their value doubles every
4 years.
6 years.
8 years.
12 years.
4.5 points
Question 5
1. Over the long term, the capital gain on most stocks will exceed the dividend income.
True
False
4.5 points
Question 6
1. One motive for issuing classified stock with different voting rights is to
increase the market value of the company.
avoid SEC reporting requirements.
allow the company's founders to retain control of the company.
facilitate the issue of additional shares in the future.
4.5 points
Question 7
1. The rate of return on a foreign investment is affected by changes in the exchange rates.
True
False
4.5 points
Question 8
1. Which of the following are characteristics of blue-chip stocks?
III and IV only
II and III only
I, II and IV only
II, III and IV only
4.5 points
Question 9
1. Since each share of common stock represents ownership in a company, shares of common stock are often referred to as
illiquid investments.
equity securities.
fixed-income securities.
unit-cost securities.
4.5 points
Question 10
1. Aggressive stock management
requires holding speculative stocks for the long term.
involves active stock trading in the short-term in the quest for capital gains.
concentrates on the long-term growth aspects of a security.
concentrates on high dividend yielding stocks.
