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WorksheetsRisk and Return
Total questions: 15
Worksheet time: 1hrs 15mins
Ahmad is considering investing in stocks. Which is the less risky investment?
Stock A: SD = 10%; E(R) = 10%
Stock B: SD = 6%; E(R) = 10%
Stock C: SD = 8%; E(R) = 12%
Stock D: SD = 20%; E(R) = 24%
Probability = 15%; Return = -5%
Probability = 20%; Return = 10%
Probability = 30%; Return = 15%
Probability = 35%; Return = 25%
What is the expected rate of return on the investment?
15.4%
14.5%
15.5%
16%
......... refers to the portion of an asset's risk that attributes to firm's specific random events, for example strikes and robberies, that can be eliminated by diversification.
Market risk
General risk
Unique risk
Non-diversifiable risk
Event 1: BNM announced an increase in interest rate resulted an increase of 1% company's cost of financing.
Event 2: A fire caused by an accident at one of the company's store resulted in a huge loss for the company.
Determine the type of risk that can be associated to each of the events.
Unsystematic risk and Unsystematic risk
Unsystematic risk and Systematic risk
Systematic risk and Systematic risk
Systematic risk and Unsystematic risk
A person has invested Rs. 25,000 in 2018. In 2020 he received a sum of Rs. 26,700. Calculate CAGR.
3.35%
8%
10%
11%
Formula for HPR is ____________
(Total Returns/ Investment)*100
((Price at the end- Price at the beginning)+ Dividend )/ (Price at the beginning) *100
(Price at the end/ Price at the beginning)*100
None of the above
In HPR, dividend income is considered for calculating returns.
True
False
Investor A invested in stock XYZ with initial amount of 100 millions VND for 5 years.
Holding period return for each year: 30%, 15%, 10%, 20%, 50%. What is the arithmetic mean return?
20%
25%
30%
None of them
Investor A receives 15%/year nominal return on certificates of deposit. Given that inflation rate is 3%, what will the real return of this investment?
10.84%
11.65%
12.76%
None of them
Investor A invested in stock XYZ with initial amount of 100 millions VND for 4 years.
Holding period return for each year: 10%, 50%, -20%. What is the geometric mean return?
8,1%
9,7%
10,8%
None of them
If inflation rate is positive number, what is the relationship between nominal return and real return?
Nominal return < real return
Nominal return > real return
Nominal return = Real return
What is NOMINAL RATE OF INTEREST?
Is a required rate of return on a fixed-income security that has no risk in an economic environment of zero inflation.
It tell how much more purchasing power we have.
It is equal to sum of real risk-free rate interest plus compensation for taking different types of risk and several risk premiums.
It is cost of money when government issues the securities
