Which one of the following statements is correct based on the period 1

1.Which one of the following statements correctly applies to the period 1926–2016? 选项： A:Large-company stocks earned a higher average risk premium than did small-company stocks. B:The average inflation rate exceeded the average return on U.S. Treasury bills. C:Large-company stocks had an average annual return of 14.7 percent. D: Inflation averaged 2.6 percent for the period. E:Long-term corporate bonds outperformed long-term government bonds.

2.For the period 1926–2016, U.S. Treasury bills always: 选项： A:provided an annual rate of return that exceeded the annual inflation rate. B:had an annual rate of return in excess of 1.2 percent. C:provided a positive annual rate of return. D:earned a higher annual rate of return than long-term government bonds E:had a greater variation in returns year-over-year than did long-term government bonds.

3.Which one of the following statements correctly applies to the period 1926–2016? 选项： A: Large-company stocks earned a higher average risk premium than did small-company stocks. B: The average inflation rate exceeded the average return on U.S. Treasury bills. C: Large-company stocks had an average annual return of 14.7 percent. D: Inflation averaged 2.6 percent for the period. E: Long-term corporate bonds outperformed long-term government bonds.Difficulty: 1 EasyTopic: Historical performanceLearning Objective: 12-02 Discuss the historical returns on various important types of investments.

4.For the period 1926–2016, U.S. Treasury bills always: 选项： A: provided an annual rate of return that exceeded the annual inflation rate. B: had an annual rate of return in excess of 1.2 percent. C: provided a positive annual rate of return. D: earned a higher annual rate of return than long-term government bonds. E: had a greater variation in returns year-over-year than did long-term government bonds.Difficulty: 1 EasyTopic: Historical performanceLearning Objective: 12-02 Discuss the historical returns on various important types of investments.

5.Which one of the following categories of securities had the highest average annual return for the period 1926–2016? 选项： A: U.S. Treasury bills B: Large-company stocks C: Small-company stocks D: Long-term corporate bonds E: Long-term government bondsDifficulty: 1 EasyTopic: Historical performanceLearning Objective: 12-02 Discuss the historical returns on various important types of investments.

6.Why are the interest rates of U.S. Treasury securities less than the interest rates of equivalent corporate bonds? 选项： A、The U.S. government has a high credit spread. B、There is significant risk that the U.S. government will default. C、 U.S. Treasury securities are widely regarded to be risk-free. D、U.S. Treasury securities yield inflation adjusted interest rates.

7.Why are the interest rates of U.S. Treasury securities less than the interest rates of equivalent corporate bonds? 选项： A:The U.S. government has a high credit spread.; B:There is significant risk that the U.S. government will default.; C: U.S. Treasury securities are widely regarded to be risk-free.; D:U.S. Treasury securities yield inflation adjusted interest rates.

8.Stock A and Stock B both have an expected return of 10 percent and a standard deviation of 25 percent. Stock A has a beta of 0.8 and Stock B has a beta of 1.2. The correlation coefficient, r, between the two stocks is 0.6. Portfolio P is a portfolio with 50 percent invested in Stock A and 50 percent invested in Stock B. Which of the following statements is most correct? （）选项： A:Portfolio P has a coefficient of variation equal to 2.5 B:Portfolio P has more market risk than Stock A but less market risk than Stock B C:Portfolio P has a standard deviation of 25 percent and a beta of 1.0 D:All of the statements above are correct E:None of the statements above is correct

9.Most economists agree that the target rate of inflation for the central banks should be: 选项： A: between 7 and 9 percent. B: less than zero. C: above zero for fears of deflation. D: something over 3 but less than 6 percent.

10.(I) Prices of longer-maturity bonds respond more dramatically to changes in interest rates. (II) Prices and returns for long-term bonds are less volatile than those for short-term bonds.

11.In recent years, both expected inflation and the market risk premium (k – k) have declineD. Assume that all stocks have positive betas. Which of the following is likely to have occurred as a result of these changes? ( )选项： A:The average required return on the market, k, has remained constant, but the required returns have fallen for stocks that have betas greater than 1.0. B:The required returns on all stocks have fallen by the same amount. C:The required returns on all stocks have fallen, but the decline has been greater for stocks with higher betas. D:The required returns on all stocks have fallen, but the decline has been greater for stocks with lower betas. E:The required returns have increased for stocks with betas greater than 1.0 but have declined for stocks with betas less than 1.0.

12.The Japanese ________ (economic) grew at an annual rate of more than 10 percent.

13.UK government bonds pay less interest than corporate bonds issued by UK companies because the government bonds carry less credit risk.（）选项：A、是 B、否

14.Four years ago, Saul invested $500. Three years ago, Trek invested $600. Today, these two investments are each worth $800. Assume each account continues to earn its respective rate of return. Which one of the following statements is correct concerning these investments? 选项： A:Three years from today, Trek's investment will be worth more than Saul's. B:One year ago, Saul's investment was worth less than Trek's investment. C:Trek earns a higher rate of return than Saul. D:Trek has earned an average annual interest rate of 9.86 percent. E:Saul has earned an average annual interest rate of 12.64 percent. F:Analytical Thinking

15.Which of the following is a characteristic of Treasury bills? 选项： A、They are coupon instruments B、They are the short term debt instruments issued by major corporations C、They are discount securities D、They have more risk than other money market securities E、All of the above are characteristics of Treasury bills

16.According to the international Fisher effect, if U.S. investors expect a 5 percent rate of domestic inflation over one year and a 2 percent rate of inflation in European countries that use the euro, and if they require a 3 percent real return on investments over one year, the nominal interest rate on one-year U.S. Treasury securities would be:选项： A:2 percent.; B:3 percent.; C:3 percent.; D:5 percent.; E:8 percent.

17.Suppose that population grows by 2 percent. For the standard of living to rise, which of the following must occur? ( )选项： A:Nominal GDP must grow by more than 2 percent.; B:Real GDP must grow by more than 2 percent.; C:Real GDP per capita must grow by more than 2 percent.; D:consumption spending must grow by more than 2 percent.

18. Municipal bonds in U.S. might lower interest rate than treasury bonds because municipal have lower default-risk.

19.Compared to interest rates on long-term U.S. government bonds, interest rates on three-month Treasury bills fluctuate _____ and are _____ on average. 选项： A:more; lower; B:less; lower; C:more; higher; D:less; higher

20.If the average annual rate of return for common stocks is 11.7 percent, and 4.0 percent for U.S. Treasury bills, what is the average market risk premium?选项： A:15.7 percent; B:4.0 percent; C:7.7 percent; D:Not enough information is provided.

21.Compared to interest rates on long-term U.S. government bonds, interest rates on three-month Treasury bills fluctuate _____ and are _____ on average. 选项： A、more; lower B、less; lower C、more; higher D、less; higher

22.The standard deviation of a portfolio: 选项： A: is a weighted average of the standard deviations of the individual securities held in the portfolio. B: can never be less than the standard deviation of the most risky security in the portfolio. C: must be equal to or greater than the lowest standard deviation of any single security held in the portfolio. D: is an arithmetic average of the standard deviations of the individual securities which comprise the portfolio. E: can be less than the standard deviation of the least risky security in the portfolio.Difficulty: 1 EasyTopic: Standard deviation and varianceLearning Objective: 13-01 Show how to calculate expected returns, variance, and standard deviation.

23.The market rate of return is 11 percent and the risk-free rate of return is 3 percent. Lexant stock has 3 percent less systematic risk than the market and has an actual return of 12 percent. This stock:选项： A:is underpriced.; B:is correctly priced.; C:will plot below the security market line.; D:will plot on the security market line