age 1 of 159
FINA 5320 3 EXAM STUDY GUIDE 2025/2026
COMPLETE QUESTIONS WITH CORRECT DETAILED
ANSWERS || 100% GUARANTEED PASS <BRAND
NEW VERSION>
The excess return is computed by ____ the average return for
the investment
a. subtracting the inflation rate from
b. adding the inflation rate to
c. subtracting the average return on the US treasury bill from
d. adding the average return on the us treasury bill to
,age 2 of 159
e. subtracting the average return on long-term government
bonds from .....Answer.......c. subtracting the average return on
the US treasury bill from
The variance of returns is computed by dividing the sum of the
a. squared deviations by the number of returns minus one
b. average returns by the number of returns minus one
c. average returns by the number of returns plus one
d. squared deviations by the average rate of return
e. squared deviations by the number of returns plus one
.....Answer.......a. squared deviations by the number of returns
minus one
,age 3 of 159
In estimating the future equity risk premium, it is important to
include assumptions about the
a. historical distribution of returns on derivative securities only
b. future risk environment only
c. amount of risk aversion of future investors only
d. historical distribution of returns on derivative securities and the
future risk environment
e. future risk environment and the amount of risk aversion of
future investors .....Answer.......e. future risk environment and the
amount of risk aversion of future investors
Which one of these is a measure of the interrelationship between
two securities?
, age 4 of 159
a. covariance
b. duration
c. standard deviation
d. alpha
e. variance .....Answer.......a. covariance
Which one of the following statements is correct concerning the
expected rate of return on an individual stock given various
states of the economy?
a. the expected return is a geometric average where the
probabilities of the economic states are used as the exponential
powers
FINA 5320 3 EXAM STUDY GUIDE 2025/2026
COMPLETE QUESTIONS WITH CORRECT DETAILED
ANSWERS || 100% GUARANTEED PASS <BRAND
NEW VERSION>
The excess return is computed by ____ the average return for
the investment
a. subtracting the inflation rate from
b. adding the inflation rate to
c. subtracting the average return on the US treasury bill from
d. adding the average return on the us treasury bill to
,age 2 of 159
e. subtracting the average return on long-term government
bonds from .....Answer.......c. subtracting the average return on
the US treasury bill from
The variance of returns is computed by dividing the sum of the
a. squared deviations by the number of returns minus one
b. average returns by the number of returns minus one
c. average returns by the number of returns plus one
d. squared deviations by the average rate of return
e. squared deviations by the number of returns plus one
.....Answer.......a. squared deviations by the number of returns
minus one
,age 3 of 159
In estimating the future equity risk premium, it is important to
include assumptions about the
a. historical distribution of returns on derivative securities only
b. future risk environment only
c. amount of risk aversion of future investors only
d. historical distribution of returns on derivative securities and the
future risk environment
e. future risk environment and the amount of risk aversion of
future investors .....Answer.......e. future risk environment and the
amount of risk aversion of future investors
Which one of these is a measure of the interrelationship between
two securities?
, age 4 of 159
a. covariance
b. duration
c. standard deviation
d. alpha
e. variance .....Answer.......a. covariance
Which one of the following statements is correct concerning the
expected rate of return on an individual stock given various
states of the economy?
a. the expected return is a geometric average where the
probabilities of the economic states are used as the exponential
powers
