【正文】 CHAPTER 12CHAPTER 12Some Lessons from Capital Market HistoryI. DEFINITIONSRISK PREMIUMa 1. The excess return required from a risky asset over that required from a riskfree asset is called the: a. risk premium. b. geometric premium. c. excess return. d. average return. e. variance.VARIANCEb 2. The average squared difference between the actual return and the average return is called the: a. volatility return. b. variance. c. standard deviation. d. risk premium. e. excess return.STANDARD DEVIATIONc 3. The standard deviation for a set of stock returns can be calculated as the: a. positive square root of the average return. b. average squared difference between the actual return and the average return. c. positive square root of the variance. d. average return divided by N minus one, where N is the number of returns. e. variance squared.NORMAL DISTRIBUTIONd 4. A symmetric, bellshaped frequency distribution that is pletely defined by its mean and standard deviation is the _____ distribution. a. gamma b. Poisson c. bimodal d. normal e. uniformGEOMETRIC AVERAGE RETURNd 5. The average pound return earned per year over a multiyear period is called the _____ average return. a. arithmetic b. standard c. variant d. geometric e. realARITHMETIC AVERAGE RETURNa 6. The return earned in an average year over a multiyear period is called the _____ average return. a. arithmetic b. standard c. variant d. geometric e. realEFFICIENT CAPITAL MARKETe 7. An efficient capital market is one in which: a. brokerage missions are zero. b. taxes are irrelevant. c. securities always offer a positive rate of return to investors. d. security prices are guaranteed by the . Securities and Exchange Commission to be fair. e. security prices reflect available information.EFFICIENT MARKETS HYPOTHESISa 8. The notion that actual capital markets, such as the NYSE, are fairly priced is called the: a. Efficient Markets Hypothesis (EMH). b. Law of One Price. c. Open Markets Theorem. d. LaissezFaire Axiom. e. Monopoly Pricing Theorem.STRONG FORM EFFICIENCYb 9. The hypothesis that market prices reflect all available information of every kind is called _____ form efficiency. a. open b. strong c. semistrong d. weak e. stableSEMI STRONG FORM EFFICIENCYc 10. The hypothesis that market prices reflect all publiclyavailable information is called _____ form efficiency. a. open b. strong c. semistrong d. weak e. stableWEAK FORM EFFICIENCYd 11. The hypothesis that market prices reflect all historical information is called _____ form efficiency. a. open b. strong c. semistrong d. weak e. stableII. CONCEPTSTOTAL RETURNd 12. The total percentage return on an equity investment is puted using the formula ______, where P1 is the purchase cost, P2 represents the sale proceeds, and d is the dividend ine. a. (P2 – P1) 184。 (P2 + d) b. (P1 – P2) 184。 (P2 + d) c. (P1 – P2 – d) 184。 P1 d. (P2 – P1 + d) 184。 P1 e. (P2 – P1 + d) 184。 P2DIVIDEND YIELDa 13. The dividend yield is equal to _____, where P1 is the purchase cost, P2 represents the sale proceeds, and d is the dividend ine. a. d 184。 P1 b. d 180。 P1 c. d 184。 P2 d. d 180。 P2 e. d 184。 (P1 + P2)DIVIDEND YIELDc 14. The Zolo Co. just declared that they are increasing their annual dividend from $ per share to $ per share. If the stock price remains constant, then: a. the capital gains yield will decrease. b. the capital gains yield will increase. c. the dividend yield will increase. d. the dividend yield will also remain constant. e. neither the capital gains yield nor the dividend yield will change.CAPITAL GAINb 15. The dollar amount of the capital gain on an investment is puted as _____, where P1 is the purchase cost, P2 represents the sale proceeds, and d is the dividend ine. a. P1 – P2 b. P2 – P1 c. P2 184。 P1 d. P1 – P2 + d e. P2 – P1 – dTOTAL RETURNe 16. The capital gains yield plus the dividend yield on a security is called the: a. variance of returns. b. geometric return. c. average period return. d. summation of returns. e. total return.REAL RETURNc 17. The real rate of return on a stock is approximately equal to the nominal rate of return: a. multiplied by (1 + inflation rate). b. plus the inflation rate. c. minus the inflation rate. d. divided by (1 + inflation rate). e. divided by (1 inflation rate).REAL RETURNc 18. As long as the inflation rate is positive, the real rate of return on a security investment will be ____ the nominal rate of return. a. greater than b. equal to c. less than d. greater than or equal to e. unrelated toHISTORICAL RECORDd 19. A portfolio of large pany stocks would contain which one of the following types of securities? a. stock of the firms which represent the smallest 20 percent of the panies listed on the NYSE b. . Treasury bills c. longterm corporate bonds d. stocks of firms included in the Samp。P 500 index e. longterm government bondsHISTORICAL RECORDd 20. Based on the period of 1926 through 2003, _____ have tended to outperform other securities over the longterm. a. . Treasury bills b. large pany stocks c. longterm corporate bonds d. small pany stocks e. longterm government bondsHISTORICAL RECORDa 21. Which one of the following types of securities has tended to produce the lowest real rate of return for the period 1926 through 2003? a. . Treasury bills b. longterm government bonds c. small pany stocks d. large pany stocks e. longterm corporate bondsHISTORICAL RECORDd 22. On average, for the period 1926 through 2003: a. the real rate of return on . Treasury bills has been negative. b. small pany stocks have underperformed large pany stocks. c. longterm government bonds have produced higher ret