1. Bond X is worth $91 today. The bond will mature in one year and pay $100 or $84 with probabilities 0.75 and 0.25, respectively. Assuming the bond pays no cash flows during the year, which of the following is closest to the expected return on the bond? 5% 0% 0% 5% 0% 2. At the beginning of the year, a mutual fund has a NAV of $20. At the end of the year, the NAV is $21 and the fund has received no dividends or other distributions throughout the year. The return on the fund’s benchmark over the same period of time was 10%. Suppose the fund incurred expenses of $2 per fund share during the year. What was the return on the fund’s underlying portfolio before any expenses that affected NAV? Did this before-expense return beat the fund’s benchmark? 15%; Yes, the fund’s underlying portfolio beat its benchmark 15%; No, the fund’s underlying portfolio beat its benchmark 0%; No, the fund’s underlying portfolio beat its benchmark 20%; Yes, the fund’s underlying portfolio beat its benchmark None of the above 3. Your investment has a 40% chance of earning a 15% rate of return, a 50% chance of earning a 10% rate of return, and a 10% chance of losing 3%. The standard deviation of this investment is closest to ________. 0% 0% 0% 0% 0% 4. A stock sold for $30 at the beginning of the year. The end-of-year stock price was $30.50. The total return for the year was 7.7 percent. The amount of the annual dividend is closest to ______. $1.80 $1.10 $1.40 $1.60 $2.30 5. You are tracking fund XYZ, which has earned returns of 2%, 8%, -7%, and 13% over the last four years, respectively. If you had invested $1000 at the beginning of each year in fund XYZ, which of the following would be closest to your dollar-weighted return? 5% 5% 0% 0% 0%
1. Bond X is worth $91 today. The bond will mature in one year and pay $100 or $84 with probabilities 0.75 and 0.25, respectively. Assuming the bond pays no cash flows during the year, which of the following is closest to the expected return on the bond?
- 5%
- 0%
- 0%
- 5%
- 0%
2. At the beginning of the year, a mutual fund has a NAV of $20. At the end of the year, the NAV is $21 and the fund has received no dividends or other distributions throughout the year. The return on the fund’s benchmark over the same period of time was 10%. Suppose the fund incurred expenses of $2 per fund share during the year.
What was the return on the fund’s underlying portfolio before any expenses that affected NAV? Did this before-expense return beat the fund’s benchmark?
- 15%; Yes, the fund’s underlying portfolio beat its benchmark
- 15%; No, the fund’s underlying portfolio beat its benchmark
- 0%; No, the fund’s underlying portfolio beat its benchmark
- 20%; Yes, the fund’s underlying portfolio beat its benchmark
- None of the above
3. Your investment has a 40% chance of earning a 15% rate of return, a 50% chance of earning a 10% rate of return, and a 10% chance of losing 3%.
The standard deviation of this investment is closest to ________.
- 0%
- 0%
- 0%
- 0%
- 0%
4. A stock sold for $30 at the beginning of the year. The end-of-year stock price was $30.50. The total return for the year was 7.7 percent. The amount of the annual dividend is closest to ______.
- $1.80
- $1.10
- $1.40
- $1.60
- $2.30
5. You are tracking fund XYZ, which has earned returns of 2%, 8%, -7%, and 13% over the last four years, respectively. If you had invested $1000 at the beginning of each year in fund XYZ, which of the following would be closest to your dollar-weighted return?
- 5%
- 5%
- 0%
- 0%
- 0%
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