投资学第7版Test-Bank答案05

Chapter5LearningAboutRiskandReturnFromtheHistoricalRecord88MultipleChoiceQuestions1.Overthepastyearyouearnedanominalrateofinterestof10percentonyourmoney.Theinflationratewas5percentoverthesameperiod.TheexactactualgrowthrateofyourpurchasingpowerwasA)15.5%.B)10.0%.C)5.0%.D)4.8%.E)15.0%Answer:DDifficulty:ModerateRationale:r=(1+R)/(1+I)-1;1.10%/1.5%-1=4.8%.2.Ayearago,youinvested$1,000inasavingsaccountthatpaysanannualinterestrateof7%.Whatisyourapproximateannualrealrateofreturniftherateofinflationwas3%overtheyear?A)4%.B)10%.C)7%.D)3%.E)noneoftheabove.Answer:ADifficulty:EasyRationale:7%-3%=4%.3.Iftheannualrealrateofinterestis5%andtheexpectedinflationrateis4%,thenominalrateofinterestwouldbeapproximatelyA)1%.B)9%.C)20%.D)15%.E)noneoftheabove.Answer:BDifficulty:EasyRationale:5%+4%=9%.Chapter5LearningAboutRiskandReturnFromtheHistoricalRecord894.Youpurchasedashareofstockfor$20.Oneyearlateryoureceived$1asdividendandsoldthesharefor$29.Whatwasyourholdingperiodreturn?A)45%B)50%C)5%D)40%E)noneoftheaboveAnswer:BDifficulty:ModerateRationale:($1+$29-$20)/$20=0.5000,or50%.5.Whichofthefollowingdetermine(s)thelevelofrealinterestrates?I)thesupplyofsavingsbyhouseholdsandbusinessfirmsII)thedemandforinvestmentfundsIII)thegovernment'snetsupplyand/ordemandforfundsA)IonlyB)IIonlyC)IandIIonlyD)I,II,andIIIE)noneoftheaboveAnswer:DDifficulty:ModerateRationale:Thevalueofsavingsbyhouseholdsisthemajorsupplyoffunds;thedemandforinvestmentfundsisaportionofthetotaldemandforfunds;thegovernment'spositioncanbeoneofeithernetsupplier,ornetdemanderoffunds.Theabovefactorsconstitutethetotalsupplyanddemandforfunds,whichdeterminerealinterestrates.Chapter5LearningAboutRiskandReturnFromtheHistoricalRecord906.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,andIVonlyAnswer:BDifficulty:ModerateRationale:Theexpectedrateofinflationisadeterminantofnominal,notreal,interestrates.Realratesaredeterminedbythesupplyanddemandforfunds,whichcanbeaffectedbytheFed.7.Whichofthefollowingstatementsistrue?A)Inflationhasnoeffectonthenominalrateofinterest.B)Therealizednominalrateofinterestisalwaysgreaterthantherealrateofinterest.C)Certificatesofdepositofferaguaranteedrealrateofinterest.D)Noneoftheaboveistrue.E)A,BandCAnswer:DDifficulty:ModerateRationale:Expectedinflationratesareadeterminantofnominalinterestrates.Therealizednominalrateofinterestwouldbenegativeifthedifferencebetweenactualandanticipatedinflationratesexceededtherealrate.Therealizednominalrateofinterestwouldbelessthantherealrateiftheunexpectedinflationweregreaterthantherealrateofinterest.Certificatesofdepositcontainarealratebasedonanestimateofinflationthatisnotguaranteed.Chapter5LearningAboutRiskandReturnFromtheHistoricalRecord918.Otherthingsequal,anincreaseinthegovernmentbudgetdeficitA)drivestheinterestratedown.B)drivestheinterestrateup.C)mightnothaveanyeffectoninterestrates.D)increasesbusinessprospects.E)noneoftheabove.Answer:BDifficulty:ModerateRationale:Anincreaseinthegovernmentbudgetdeficit,otherthingsequal,causesthegovernmenttoincreaseitsborrowing,whichincreasesthedemandforfundsanddrivesinterestratesup.9.Ceterisparibus,adecreaseinthedemandforloanablefundsA)drivestheinterestratedown.B)drivestheinterestrateup.C)mightnothaveanyeffectoninterestrate.D)resultsfromanincreaseinbusinessprospectsandadecreaseinthelevelofsavings.E)noneoftheabove.Answer:ADifficulty:ModerateRationale:Adecreaseindemand,ceterisparibus,alwaysdrivesinterestratesdown.Anincreaseinbusinessprospectswouldincreasethedemandforfunds.Thesavingslevelaffectsthesupplyof,notthedemandfor,funds.10.Theholdingperiodreturn(HPR)onashareofstockisequaltoA)thecapitalgainyieldduringtheperiod,plustheinflationrate.B)thecapitalgainyieldduringtheperiod,plusthedividendyield.C)thecurrentyield,plusthedividendyield.D)thedividendyield,plustheriskpremium.E)thechangeinstockprice.Answer:BDifficulty:ModerateRationale:TheHPRofanyinvestmentisthesumofthecapitalgainandthecashflowovertheperiod,whichforcommonstockisB.Chapter5LearningAboutRiskandReturnFromtheHistoricalRecord9211.Historicalrecordsregardingreturnonstocks,Treasurybonds,andTreasurybillsbetween1926and2005showthatA)stocksofferedinvestorsgreaterratesofreturnthanbondsandbills.B)stockreturnswerelessvolatilethanthoseofbondsandbills.C)bondsofferedinvestorsgreaterratesofreturnthanstocksandbills.D)billsoutperformedstocksandbonds.E)treasurybillsalwaysofferedarateofreturngreaterthaninflation.Answer:ADifficulty:ModerateRationale:Thehistoricaldatashowthat,asexpected,stocksofferagreaterreturnandgreatervolatilitythantheotherinvestmentalternatives.InflationsometimesexceededtheT-billreturn.12.Iftheinterestratepaidbyborrowersandtheinterestratereceivedbysaversaccuratelyreflectstherealizedrateofinflation:A)borrowersgaina