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MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. The total dollar return on a share of stock is defined as the: change in the stock price divided by the original stock price. annual dividend income received. change in the price of the stock over a period of time. dividend income divided by the beginning price per share. capital gain or loss plus any dividend income. The dividend yield is defined as the annual dividend expressed as a percentage of the: average stock price. capital gain. initial stock price. totalannualreturn. ending stock price. The capital gains yield is equal to: (Pt + 1 - Pt)/Pt. B) (Pt + 1 - Pt)/Pt + 1. C) (Pt - Pt + 1 + Dt + 1)/Pt + 1. Dt + 1/Pt. (Pt + 1 - Pt +Dt)/Pt. When the total return on an investment is expressed on a per-year basis it is called the: effective annual return. initial return. capital gains yield. dividend yield. holding period return. The risk-freerate is: another term for the dividend yield. defined as the total of the capital gains yield plus the dividend yield. the rate of return on a riskless investment. the rate of return earned on an investment in a firm that you personally own. defined as the increase in the value of a share of stock over time. The rate of return earned on a U.S. Treasury bill is frequently used as a proxy for the: deflated rate of return. risk premium. expected rate of return. market rate of return. risk-free rate. The risk premium is defined as the rate of return on: a U.S. Treasury bill. a risky asset minus the risk-free rate. a riskless investment. the overall market. a risky asset minus the inflation rate. The additional return earned for accepting risk is called the: real return. inflated return. riskless rate. risk premium. capital gains yield. The standard deviation is a measure of: total return. changes in the capital gains rate. volatility. changes in dividend yields. capital gains. A frequency distribution, which is completely defined by its average (mean) and variance or standard deviation, is referred to as a(n): expected rate of return. average geometric return. average arithmetic return. normal distribution. variance distribution. The arithmetic average return is the: average compound return earned per year over a multi-year period. return earned in an average year over a multi-year period. summation of the returns for a number of years, t, divided by (t -1). average squared return earned in a single year. compound total return for a period of years, t, divided by t. The average compound return earned per year over a multi-year period is called the: average capital gains yield arithmetic average return total return variance geometric average return The average compound return earned per year over a multi-year period when inflows and outflows are considered is called the: total return. average capital gains yield. geometric average return. arithmetic average return. dollar-weighted average return.

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