Financial Management: Principles and Applications, 13/e

Study Questions

1. 7–1. In Regardless of Your Major: Using Statistics on page 194, we note that statisticians analyze data. Moreover, in your statistics class you learned how to describe random outcomes using statistical measures such as expected value and variance. How does our knowledge of basic statistics help us evaluate investment opportunities?

2. 7–2. Describe the concept of a realized rate of return as if you were explaining it to your grandfather, who has never had a finance class.

3. 7–3. How do cash dividends affect the realized rate of return from investing in shares of common stock?

4. 7–4. How does the expected rate of return concept differ from that of the realized rate of return?

5. 7–5. Describe the concept of an expected rate of return as ...