Test Bank For Public Finance, 10th Edition All Chapters - 9780078021688.pdf

CorporatepFinance,p12ep(Ross)
Chapterp10p LessonspfrompMarketpHistory

1) AlphapIndustriespstockpsoldpforp$39papsharepatpthepbeginningpofpthepyear.pDuringpthepyear,pthepc
ompanyppaidpapdividendpofp$3papsharepandpthenpendedpthepyearpwithpapstockppricepofp$37.pThepcha
ngepinpthepstockppricepispbestpdescribedpaspa:
A) capitalpgain.
B) positiveptotalpdollarpreturn.
C) capitalploss.
D) negativeptotalpdollarpreturn.
E) negativepdividendpyield.

Answer:p CpDifficul
ty:p1pEasy
Section:p 10.1pReturnsp
Topic:p TotalpreturnpBl
oom's:p Remember
AACSB:p ReflectivepThinkingpAccessi
bility:p KeyboardpNavigation

2) Thepcapitalpgainspyieldppluspthepdividendpyieldponpapsecuritypispcalledpthe:
A) variancepofpreturns.
B) geometricpreturn.
C) averagepperiodpreturn.
D) currentpyield.
E) totalpreturn.

Answer:p EpDifficult
y:p1pEasy
Section:p 10.1pReturnsp
Topic:p TotalpreturnpBl
oom's:p Remember
AACSB:p ReflectivepThinkingpAccessi
bility:p KeyboardpNavigation




1
Copyrightp©p2019pMcGraw-HillpEducation.pAllprightspreserved.
NopreproductionporpdistributionpwithoutptheppriorpwrittenpconsentpofpMcGraw-HillpEducation.

,3) Apportfoliopofpsmall-
companypcommonpstocks,paspusedpinpthispcourse,pispbestpdescribedpaspthepstockspofpthepfirmspwhic
h:
A) representpthepsmallestptwentyppercentpofpthepcompaniesplistedponpthepNYSE.
B) havepgoneppublicpwithinptheppastpfivepyears.
C) areptoopsmallptopbeplistedponpthepNYSE.
D) arepincludedpinpthepS&Pp500pindex.
E) tradeppubliclypforp$5papshareporpless.

Answer:p ApDifficul
ty:p1pEasy
Section:p 10.2pHoldingpPeriodpReturnspT
opic:p Assetpclasses
Bloom's:p Rememberp AACSB
:p ReflectivepThinking
Accessibility:p KeyboardpNavigation

4) Basedponpthepperiodpofp1926pthroughp2017,p
haveptendedptopoutperformpotherpsecuritiespoverptheplong-term.
A) U.S.pTreasurypbills
B) large-companypstocks
C) long-termpcorporatepbonds
D) small-companyp stocks
E) long-termpgovernmentpbonds

Answer:p DpDifficul
ty:p1pEasy
Section:p 10.2pHoldingpPeriodpReturnspT
opic:p HistoricalpperformancepBloom's:p
Understand
AACSB:p ReflectivepThinkingpAccessi
bility:p KeyboardpNavigation

5) Basedponpthepperiodpofp1926pthroughp2017,pU.S.pTreasurypbillsphavepproducedpannualpratespofpr
eturnpthat:
A) rangedpfromp−1ppercentptop+15ppercent.
B) rangedpfromp−1ppercentptop+5ppercent.
C) werepnegativeponlypduringpthepGreatpDepression.
D) havepalwayspbeenppositive.
E) neverpexceededp6ppercent.

Answer:p DpDifficul
ty:p1pEasy
Section:p 10.2pHoldingpPeriodpReturnspT
opic:p HistoricalpperformancepBloom's:p
Understand
AACSB:p ReflectivepThinking
2
Copyrightp©p2019pMcGraw-HillpEducation.pAllprightspreserved.
NopreproductionporpdistributionpwithoutptheppriorpwrittenpconsentpofpMcGraw-HillpEducation.

,Accessibility:p KeyboardpNavigation

6) Anotherptermpthatprefersptopthepaveragepratepofpreturnpispthe:
A) variance.
B) standardpdeviation.
C) realpreturn.
D) mean.
E) histogram.

Answer:p DpDifficul
ty:p1pEasy
Section:p 10.3pReturnpStatisticsp
Topic:p PortfoliopreturnpBloom's
:p Remember
AACSB:p ReflectivepThinkingpAccessi
bility:p KeyboardpNavigation

7) Whichponepofpthepfollowingptypespofpsecuritiesphasptendedptopproduceptheplowestprealpratepofpr
eturnpforpthepperiodp1926pthroughp2017?
A) U.S.pTreasurypbills
B) Long-termpgovernmentpbonds
C) Small-companypstocks
D) Large-companypstocks
E) Long-termpcorporatepbonds

Answer:p ApDifficul
ty:p1pEasy
Section:p 10.4pAveragepStockpReturnspandpRisk-
FreepReturnspTopic:p Historicalpperformance
Bloom's:p Rememberp AACSB
:p ReflectivepThinking
Accessibility:p KeyboardpNavigation




3
Copyrightp©p2019pMcGraw-HillpEducation.pAllprightspreserved.
NopreproductionporpdistributionpwithoutptheppriorpwrittenpconsentpofpMcGraw-HillpEducation.

, 8) Onpaverage,pforpthepperiodp1926pthroughp2017:
A) theprealpratepofpreturnponpU.S.pTreasurypbillsphaspbeenpnegative.
B) small-companypstocksphavepunderperformedplarge-companypstocks.
C) long-termpgovernmentpbondsphavepproducedphigherpreturnspthanplong-termpcorporatepbonds.
D) thepexcesspreturnponplong-termpcorporatepbondsphaspexceededpthepexcesspreturnponplong-
termpgovernmentpbonds.
E) thepexcesspreturnponplarge-companypstocksphaspexceededpthepexcesspreturnponpsmall-
companypstocks.

Answer:p DpDifficul
ty:p1pEasy
Section:p 10.4pAveragepStockpReturnspandpRisk-
FreepReturnspTopic:p Historicalpperformance
Bloom's:p UnderstandpAACSB
:p ReflectivepThinking
Accessibility:p KeyboardpNavigation

9) Overpthepperiodpofp1926pthroughp2017,pthepannualpratepofpreturnponp
haspbeenpmorepvolatilepthanpthepannualpratepofpreturnponp .
A) large-companypstocks;psmall-companypstocks
B) U.S.pTreasurypbills;psmall-companypstocks
C) U.S.pTreasurypbills;plong-termpgovernmentpbonds
D) long-termpcorporatepbonds;psmall-companypstocks
E) large-companypstocks;plong-termpcorporatepbonds

Answer:p EpDifficult
y:p1pEasy
Section:p 10.4pAveragepStockpReturnspandpRisk-
FreepReturnspTopic:p Historicalpperformance
Bloom's:p UnderstandpAACSB
:p ReflectivepThinking
Accessibility:p KeyboardpNavigation




4
Copyrightp©p2019pMcGraw-HillpEducation.pAllprightspreserved.
NopreproductionporpdistributionpwithoutptheppriorpwrittenpconsentpofpMcGraw-HillpEducation.