Financial Management: Core Concepts, Third Edition

Prepping for Exams

1. Travis bought a share of stock for $31.50, the stock paid a dividend of $0.85, and Travis sold it six months later for $27.65. What were his dollar profit or loss and his holding period return?

   1. −$3.00, −9.52%

   2. −$3.85, −12.22%

   3. −$0.85, −2.70%

   4. −$3.85, −9.52%

2.            is a measure of uncertainty in a set of potential outcomes for an event in which there is a chance for some loss.

   1. Diversification

   2. Risk

   3. Uncertainty

   4. Collaboration

3. Which of the following classifications of securities had the smallest range of annual returns over the period 1950–1999?

   1. Large-company stocks

   2. Long-term government bonds

   3. Small-company stocks

   4. Three-month U.S. Treasury bills

4. You are considering buying a share of stock in a firm that ...