Connect 5 Solutions.docxVIP

 Top of Form ?1. award:1.00 point ? ? What are the arithmetic and geometric average returns for a stock with annual returns of 19 percent, 9 percent, –4 percent, and 13 percent? List the arithmetic answer first.??????????? →9.25 percent; 8.91 percent9.25 percent; 11.11 percent11.11 percent; 9.25 percent11.11 percent; 8.91 percent8.91 percent; 9.25 percent Arithmetic average = (0.19 + 0.09 – 0.04 + 0.13) / 4 = 0.0925 = 9.25 percent?Geometric average = [(1 + 0.19) × (1 + 0.09) × (1 – 0.04) × (1 + 0.13)]???– 1 = 0.08913 = 8.91 percent ?2. award:1.00 point ? ? As long as the inflation rate is positive, the real rate of return on a security will be ____ the nominal rate of return. greater thanequal to→less thangreater than or equal tounrelated toRefer to section 12.3 Multiple ChoiceLearning Objective: 12-01 How to calculate the return on an investment.?Difficulty: EasySection: 12.3? ?3. award:1.00 point ? ? Which one of the following categories of securities had the highest average return for the period 1926-2010? U.S. Treasury billslarge company stocks→small company stockslong-term corporate bondslong-term government bondsRefer to section 12.3 Multiple ChoiceLearning Objective: 12-02 The historical returns on various important types of investments.?Difficulty: EasySection: 12.3? ?4. award:1.00 point ? ? To convince investors to accept greater volatility (risk), you must: decrease the risk premium.→increase the risk premium.decrease the real return.decrease the risk-free rate.increase the risk-free rate.Refer to section 12.4 Multiple ChoiceLearning Objective: 12-03 The historical risks on various important types of investments.?Difficulty: EasySection: 12.4? ?5. award:1.00 point ? ? Individuals who continually monitor the financial markets seeking mispriced securities: earn excess profits over the long-term.→make the markets increasingly more efficient.are never able