Test Bank for Corporate Finance, 6th Canadian Edition by Jonathan Berk, Peter DeMarzo - All Chapters 1 to 31 bComplete Solution Grade A+.pdf

CorporatemFinance,m12em(Ross)
Chapterm10m LessonsmfrommMarketmHistory

1) AlphamIndustriesmstockmsold mform$39mamsharemat mthembeginningmof mthemyear.mDuringmthemyear,m
themcompanympaid mamdividend mof m$3mamsharemand mthenmended mthemyearmwithmamstockmpricemof m$3
7.mThemchangeminmthemstockmpricemismbest mdescribed masma:
A) capitalmgain.
B) positivemtotalmdollarmreturn.
C) capitalmloss.
D) negativemtotalmdollarmreturn.
E) negativemdividend myield.

Answer:m CmDifficul
ty:m1mEasy
Section:m 10.1mReturns
mTopic:m Totalmreturnm

Bloom's:m Remember
AACSB:m ReflectivemThinkingmAccessi
bility:m Keyboard mNavigation

2) Themcapitalmgainsmyield mplusmthemdividend myield monmamsecuritymismcalled mthe:
A) variancemof mreturns.
B) geometricmreturn.
C) averagemperiod mreturn.
D) current myield.
E) totalmreturn.

Answer:m EmDifficul
ty:m1mEasy
Section:m 10.1mReturns
mTopic:m Totalmreturnm

Bloom's:m Remember
AACSB:m ReflectivemThinkingmAccessi
bility:m Keyboard mNavigation




1
Copyright m©m2019 mMcGraw-HillmEducation.mAllmrightsmreserved.
No mreproduction mormdistribution mwithout mthempriormwritten mconsent mof mMcGraw-
HillmEducation.

,3) A mportfoliomof msmall-
companymcommonmstocks,masmused minmthismcourse,mismbest mdescribed masmthemstocksmof mthemfirmsm
which:
A) represent mthemsmallest mtwentympercent mof mthemcompaniesmlisted monmthemNYSE.
B) havemgonempublicmwithinmthempast mfivemyears.
C) aremtoomsmallmtombemlisted monmthemNYSE.
D) aremincluded minmthemS&Pm500mindex.
E) tradempubliclymform$5mamsharemormless.

Answer:m AmDifficu
lty:m1mEasy
Section:m 10.2mHoldingmPeriod mReturnsm
Topic:m Asset mclasses
Bloom's:m Rememberm AACS
B:m ReflectivemThinking
Accessibility:m Keyboard mNavigation

4) Based monmthemperiod mof m1926mthroughm2017,m
havemtended mtomoutperformmothermsecuritiesmovermthemlong-term.
A) U.S.mTreasurymbills
B) large-companymstocks
C) long-termmcorporatembonds
D) small-companymstocks
E) long-termmgovernment mbonds

Answer:m DmDifficu
lty:m1mEasy
Section:m 10.2mHoldingmPeriod mReturnsm
Topic:m HistoricalmperformancemBloom'
s:m Understand
AACSB:m ReflectivemThinkingmAccessi
bility:m Keyboard mNavigation

5) Based monmthemperiod mof m1926mthroughm2017,mU.S.mTreasurymbillsmhavemproduced mannualmrates
mof mreturnmthat:

A) ranged mfromm−1mpercent mtom+15mpercent.
B) ranged mfromm−1mpercent mtom+5mpercent.
C) weremnegativemonlymduringmthemGreat mDepression.
D) havemalwaysmbeenmpositive.
E) nevermexceeded m6mpercent.

Answer:m DmDifficu
lty:m1mEasy
Section:m 10.2mHoldingmPeriod mReturnsm
Topic:m HistoricalmperformancemBloom'
s:m Understand
AACSB:m ReflectivemThinking
2
Copyright m©m2019 mMcGraw-HillmEducation.mAllmrightsmreserved.
No mreproduction mormdistribution mwithout mthempriormwritten mconsent mof mMcGraw-
HillmEducation.

,Accessibility:m Keyboard mNavigation

6) Anothermtermmthat mrefersmtomthemaveragemratemof mreturnmismthe:
A) variance.
B) standard mdeviation.
C) realmreturn.
D) mean.
E) histogram.

Answer:m DmDifficu
lty:m1mEasy
Section:m 10.3mReturnmStatistics
mTopic:m PortfoliomreturnmBloo

m's:m Remember
AACSB:m ReflectivemThinkingmAccessi
bility:m Keyboard mNavigation

7) Whichmonemof mthemfollowingmtypesmof msecuritiesmhasmtended mtomproducemthemlowest mrealmrate
mof mreturnmformthemperiod m1926mthroughm2017?

A) U.S.mTreasurymbills
B) Long-termmgovernment mbonds
C) Small-companymstocks
D) Large-companym stocks
E) Long-termmcorporatembonds

Answer:m AmDifficu
lty:m1mEasy
Section:m 10.4mAveragemStockmReturnsmand mRisk-
FreemReturnsmTopic:m Historicalmperformance
Bloom's:m Rememberm AACS
B:m ReflectivemThinking
Accessibility:m Keyboard mNavigation




3
Copyright m©m2019 mMcGraw-HillmEducation.mAllmrightsmreserved.
No mreproduction mormdistribution mwithout mthempriormwritten mconsent mof mMcGraw-
HillmEducation.

, 8) Onmaverage,mformthemperiod m1926mthroughm2017:
A) themrealmratemof mreturnmonmU.S.mTreasurymbillsmhasmbeenmnegative.
B) small-companymstocksmhavemunderperformed mlarge-companymstocks.
C) long-termmgovernment mbondsmhavemproduced mhighermreturnsmthanmlong-term mcorporatembonds.
D) themexcessmreturnmonmlong-termmcorporatembondsmhasmexceeded mthemexcessmreturnmonmlong-
termmgovernment mbonds.
E) themexcessmreturnmonmlarge-companymstocksmhasmexceeded mthemexcessmreturnmonmsmall-
companymstocks.

Answer:m DmDifficu
lty:m1mEasy
Section:m 10.4mAveragemStockmReturnsmand mRisk-
FreemReturnsmTopic:m Historicalmperformance
Bloom's:m Understand mAACS
B:m ReflectivemThinking
Accessibility:m Keyboard mNavigation

9) Overmthemperiod mof m1926mthroughm2017,mthemannualmratemof mreturnmonm
hasmbeenmmoremvolatilemthanmthemannualmratemof mreturnmonm .
A) large-companymstocks;msmall-companymstocks
B) U.S.mTreasurymbills;msmall-companymstocks
C) U.S.mTreasurymbills;mlong-term mgovernment mbonds
D) long-termmcorporatembonds;msmall-companymstocks
E) large-companymstocks;mlong-termmcorporatembonds

Answer:m EmDifficul
ty:m1mEasy
Section:m 10.4mAveragemStockmReturnsmand mRisk-
FreemReturnsmTopic:m Historicalmperformance
Bloom's:m Understand mAACS
B:m ReflectivemThinking
Accessibility:m Keyboard mNavigation




4
Copyright m©m2019 mMcGraw-HillmEducation.mAllmrightsmreserved.
No mreproduction mormdistribution mwithout mthempriormwritten mconsent mof mMcGraw-
HillmEducation.