3. George purchased a stock for $45 one year ago. The stock is now worth $65. Du

Question

3. George purchased a stock for $45 one year ago. The stock is now worth $65. During the year, the stock paid a dividend of $2.50. What is the total return to George from owning the stock? (Round your answer to the nearest whole percent.) (3 pts) a. 5% b. 44% c. 35% d. 50% //////////4. Barbara purchased a piece of real estate last year for $85,000. The real estate is now worth $102,000. If Barbara needs to have a total return of 25 percent during the year, then what is the dollar amount of income that she needed to have to reach her objective? (4 pts) a. $3,750 b. $4,250 c. $4,750 d. $5,250 //////////5. The risk-free rate of return is currently 3 percent, whereas the market risk premium is 6 percent. If the beta of Lenz, Inc., stock is 1.8, then what is the expected return on Lenz? (4 pts) a. 8.40% b. 10.80% c. 13.80% d. 19.20% //////////6. Which one of the following statements is NOT true? a. Weak-form market efficiency implies that investors who have access to inside or private information will be able to earn abnormal returns. b. Semistrong-form market efficiency implies that investors who have access to inside or private information will be able to earn abnormal returns. c. Strong-form market efficiency implies that investors who have access to inside or private information will be able to earn abnormal returns. d. None of the above. //////////7. Bonds sell at a discount off the par value when market rates for similar bonds are a. Less than the bond

Explanation / Answer

Hi, If you like my answer rate me lifesaver first...that way only I can earn points. Thanks 3. return = (65-45+2.5)/45 = 50% option d. 50% 4. Total expected return = 25% * 85000 = $21250 So extra return = 21250 + 102000 -85000 = $4250 option b. 5. return = 3% + 1.8 * 6% = 13.8% 6. Which one of the following statements is NOT true? a. Weak-form market efficiency implies that investors who have access to inside or private information will be able to earn abnormal returns. 7. Bonds sell at a discount off the par value when market rates for similar bonds are b. Greater than the bond’s coupon rate. 8. The yield to maturity of a bond is the discount rate that makes the present value of the coupon and principal payments c. equal to the price of the bond. 9. Inverted yield curves are observed when a. the economy is growing. 10. Owners of preferred stock d. All of the above statements are true. 11. The constant-growth dividend model will provide invalid solutions when c. the growth rate of the stock equals the required rate of return for the stock. 12. The internal rate of return is b. the discount rate that makes the NPV equal to zero.

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