05 投资学 第七版.docx
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05投资学第七版
MultipleChoiceQuestions
D1.Overthepastyearyouearnedanominalrateofinterestof10percentonyourmoney.Theinflationratewas5percentoverthesameperiod.Theexactactualgrowthrateofyourpurchasingpowerwas
A)15.5%.
B)10.0%.
C)5.0%.
D)4.8%.
E)15.0%
Rationale:
r=(1+R)/(1+I)-1;1.10%/1.5%-1=4.8%.
A2.Ayearago,youinvested$1,000inasavingsaccountthatpaysanannualinterestrateof7%.Whatisyourapproximateannualrealrateofreturniftherateofinflationwas3%overtheyear?
A)4%.
B)10%.
C)7%.
D)3%.
E)noneoftheabove.
Rationale:
7%-3%=4%.
B3.Iftheannualrealrateofinterestis5%andtheexpectedinflationrateis4%,thenominalrateofinterestwouldbeapproximately
A)1%.
B)9%.
C)20%.
D)15%.
E)noneoftheabove.
Rationale:
5%+4%=9%.
B4.Youpurchasedashareofstockfor$20.Oneyearlateryoureceived$1asdividendandsoldthesharefor$29.Whatwasyourholdingperiodreturn?
A)45%
B)50%
C)5%
D)40%
E)noneoftheabove
Rationale:
($1+$29-$20)/$20=0.5000,or50%.
D5.Whichofthefollowingdetermine(s)thelevelofrealinterestrates?
I)thesupplyofsavingsbyhouseholdsandbusinessfirms
II)thedemandforinvestmentfunds
III)thegovernment'snetsupplyand/ordemandforfunds
A)Ionly
B)IIonly
C)IandIIonly
D)I,II,andIII
E)noneoftheabove
Rationale:
Thevalueofsavingsbyhouseholdsisthemajorsupplyoffunds;thedemandforinvestmentfundsisaportionofthetotaldemandforfunds;thegovernment'spositioncanbeoneofeithernetsupplier,ornetdemanderoffunds.Theabovefactorsconstitutethetotalsupplyanddemandforfunds,whichdeterminerealinterestrates.
B6.Whichofthefollowingstatement(s)is(are)true?
I)Therealrateofinterestisdeterminedbythesupplyanddemandforfunds.
II)Therealrateofinterestisdeterminedbytheexpectedrateofinflation.
III)TherealrateofinterestcanbeaffectedbyactionsoftheFed.
IV)Therealrateofinterestisequaltothenominalinterestrateplustheexpectedrateofinflation.
A)IandIIonly.
B)IandIIIonly.
C)IIIandIVonly.
D)IIandIIIonly.
E)I,II,III,andIVonly
Rationale:
Theexpectedrateofinflationisadeterminantofnominal,notreal,interestrates.Realratesaredeterminedbythesupplyanddemandforfunds,whichcanbeaffectedbytheFed.
D7.Whichofthefollowingstatementsistrue?
A)Inflationhasnoeffectonthenominalrateofinterest.
B)Therealizednominalrateofinterestisalwaysgreaterthantherealrateofinterest.
C)Certificatesofdepositofferaguaranteedrealrateofinterest.
D)Noneoftheaboveistrue.
E)A,BandC
Rationale:
Expectedinflationratesareadeterminantofnominalinterestrates.Therealizednominalrateofinterestwouldbenegativeifthedifferencebetweenactualandanticipatedinflationratesexceededtherealrate.Therealizednominalrateofinterestwouldbelessthantherealrateiftheunexpectedinflationweregreaterthantherealrateofinterest.Certificatesofdepositcontainarealratebasedonanestimateofinflationthatisnotguaranteed.
B8.Otherthingsequal,anincreaseinthegovernmentbudgetdeficit
A)drivestheinterestratedown.
B)drivestheinterestrateup.
C)mightnothaveanyeffectoninterestrates.
D)increasesbusinessprospects.
E)noneoftheabove.
Rationale:
Anincreaseinthegovernmentbudgetdeficit,otherthingsequal,causesthegovernmenttoincreaseitsborrowing,whichincreasesthedemandforfundsanddrivesinterestratesup.
A9.Ceterisparibus,adecreaseinthedemandforloanablefunds
A)drivestheinterestratedown.
B)drivestheinterestrateup.
C)mightnothaveanyeffectoninterestrate.
D)resultsfromanincreaseinbusinessprospectsandadecreaseinthelevelofsavings.
E)noneoftheabove.
Rationale:
Adecreaseindemand,ceterisparibus,alwaysdrivesinterestratesdown.Anincreaseinbusinessprospectswouldincreasethedemandforfunds.Thesavingslevelaffectsthesupplyof,notthedemandfor,funds.
B10.Theholdingperiodreturn(HPR)onashareofstockisequalto
A)thecapitalgainyieldduringtheperiod,plustheinflationrate.
B)thecapitalgainyieldduringtheperiod,plusthedividendyield.
C)thecurrentyield,plusthedividendyield.
D)thedividendyield,plustheriskpremium.
E)thechangeinstockprice.
Rationale:
TheHPRofanyinvestmentisthesumofthecapitalgainandthecashflowovertheperiod,whichforcommonstockisB.
A11.Historicalrecordsregardingreturnonstocks,Treasurybonds,andTreasurybillsbetween1926and2005showthat
A)stocksofferedinvestorsgreaterratesofreturnthanbondsandbills.
B)stockreturnswerelessvolatilethanthoseofbondsandbills.
C)bondsofferedinvestorsgreaterratesofreturnthanstocksandbills.
D)billsoutperformedstocksandbonds.
E)treasurybillsalwaysofferedarateofreturngreaterthaninflation.
Rationale:
Thehistoricaldatashowthat,asexpected,stocksofferagreaterreturnandgreatervolatilitythantheotherinvestmentalternatives.InflationsometimesexceededtheT-billreturn.
D12.Iftheinterestratepaidbyborrowersandtheinterestratereceivedbysaversaccuratelyreflectstherealizedrateofinflation:
A)borrowersgainandsaverslose.
B)saversgainandborrowerslose.
C)bothborrowersandsaverslose.
D)neitherborrowersnorsaversgainorlose.
E)bothborrowersandsaversgain.
Rationale:
Ifthedescribedinterestrateaccuratelyreflectstherateofinflation,bothborrowersandlendersarepayingandreceiving,respectively,therealrateofinterest;thus,neithergroupgains.
Usethefollowingtoanswerquestions13-15:
YouhavebeengiventhisprobabilitydistributionfortheholdingperiodreturnforKMPstock:
A13.WhatistheexpectedholdingperiodreturnforKMPstock?
A)10.40%
B)9.32%
C)11.63%
D)11.54%
E)10.88%
Rationale:
HPR=.30(18%)+.50(12%)+.20(-5%)=10.4%
B14.WhatistheexpectedstandarddeviationforKMPstock?
A)6.91%
B)8.13%
C)7.79%
D)7.25%
E)8.85%
Rationale:
s=[.30(18-10.4)2+.50(12-10.4)2+.20(-5-10.4)2]1/2=8.13%
A15.WhatistheexpectedvarianceforKMPstock?
A)66.04%
B)69.96%
C)77.04%
D)63.72%
E)78.45%
Rationale:
s=[.30(18-10.4)2+.50(12-10.4)2+.20(-5-10.4)2]=66.04%
E16.Ifthenominalreturnisconstant,theafter-taxrealrateofreturn
A)declinesastheinflationrateincreases.
B)increasesastheinflationrateincreases.
C)declinesastheinflationratedeclines.
D)increasesastheinflationratedecreases.
E)AandD.
Rationale:
Inflationrateshaveaninverseeffectonafter-taxrealratesofreturn.
D17.Theriskpremiumforcommonstocks
A)cannotbezero,forinvestorswouldbeunwillingtoinvestincommonstocks.
B)mustalwaysbepositive,intheory.
C)isnegative,ascommonstocksarerisky.
D)AandB.
E)AandC.
Rationale:
Iftheriskpremiumforcommonstockswerezeroornegative,investorswouldbeunwillingtoacceptthelowerreturnsfortheincreasedrisk.
B18.Arisk-freeintermediateorlong-terminvestment
A)isfreeofalltypesofrisk.
B)doesnotguaranteethefuturepurchasingpowerofitscashflows.
C)doesguaranteethefuturepurchasingpowerofitscashflowsasitisinsuredbytheU.S.Treasury.
D)AandB.
E)BandC.
Rationale:
Arisk-freeU.S.Treasurybondisafixedincomeinstrument,andthusdoesnotguaranteethefuturepurchasingpowerofitscashflows.Asaresult,purchasingpowerriskispresent.
D19.YoupurchaseashareofBoeingstockfor$90.Oneyearlater,afterreceivingadividendof$3,yousellthestockfor$92.Whatwasyourholdingperiodreturn?
A)4.44%
B)2.22%
C)3.33%
D)5.56%
E)noneoftheabove
Rationale:
HPR=(92-90+3)/90=5.56%
D20.Toyotastockhasthefollowingprobabilitydistributionofexpectedpricesoneyearfromnow:
IfyoubuyToyotatodayfor$55anditwillpayadividendduringtheyearof$4pershare,whatisyourexpectedholdingperiodreturnonToyota?
A)17.72%
B)18.89%
C)17.91%
D)18.18%
E)Noneoftheabove
Rationale:
E(P1)=.25(54/55-1)+.40(64/55-1)+.35(74/55-1)=18.18%.
C21.Whichofthefollowingfactorswouldnotbeexpectedtoaffectthenominalinterestrate?
A)thesupplyofloanablefunds
B)thedemandforloanablefunds
C)thecouponrateonpreviouslyissuedgovernmentbonds
D)theexpectedrateofinflation
E)governmentspendingandborrowing
Rationale:
Thenominalinterestrateisaffectedbysupply,demand,governmentactionsandinflation.Couponratesonpreviouslyissuedgovernmentbondsreflecthistoricalinterestratesbutshouldnotaffectthecurrentlevelofinterestrates.
D22.YourCertificateofDepositwillmatureinoneweekandyouareconsideringhowtoinvesttheproceeds.Ifyouinvestina30-dayCDthebankwillpayyou4%.Ifyouinvestina2-yearCDthebankwillpayyou6%interest.Whichoptionwouldyouchoose?
A)the30-dayCD,nomatterwhatyouexpectinterestratestodointhefuture
B)the2-yearCD,nomatterwhatyouexpectinterestratestodointhefuture
C)the30-dayCDifyouexpectthatinterestrateswillfallinthefuture
D)the2-yearCDifyouexpectthatinterestrateswillfallinthefuture
E)Youwouldbeindifferentbetweenthe30-dayandthe2-yearCDs.
Rationale:
Youwoul