## Test Bank For How Children Develop 4th Canadian Edition By Robert S. Siegler

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

15) If when a coin is tossed the observance of a head rewards you with a dollar and the observance of a

tail costs you fifty cents, how much would you expect to gain after twenty tosses?

A) $7.50 B) $15.00 C) $10.00 D) $5.00

Answer: D

16) Which of the following statements is correct for an investor starting with $1,000 in common stocks

over a 20-year investment horizon in which stocks averaged 11 percent in nominal terms and 4

percent in real terms? The portfolio value is now approximately:

A) $3,870 in nominal terms. B) $8,062 in nominal terms.

C) $1,800 in real terms. D) $3,679 in real terms.

Answer: B

17) An investor receives a 15 percent total return by purchasing a stock for $40 and selling it after one

year with a 10 percent capital gain. How much was received in dividend income during the year?

A) $2.20 B) $2.00 C) $4.00 D) $6.00

Answer: B

18) Which of the following statements is true for a stock that sells now for $60, pays an annual dividend

of $3.00, and experienced a 30 percent return on investment over the past year? Its price one year

ago was:

A) $56.10. B) $48.46. C) $46.15. D) $42.00.

Answer: B

19) Common stock is held for two years, during which time it receives an annual dividend of $10. The

stock was sold for $100 and generated an average annual return of 16 percent. What price was paid

for the stock?

A) $90.91 B) $61.60 C) $88.00 D) $64.80

Answer: A

20) The covariance of two stocks was calculated at -.01733. If the standard deviation of the first stock is

.106 and .164 for the second, determine the correlation.

A) -.887 B) -.687 C) -.587 D) -.997

Answer: D

21) What is the variance of a three-stock portfolio that produced returns of 20 percent, 25 percent and

30 percent?

A) 0.33% B) 0.50% C) 0.17% D) 0.10%

Answer: C

22) If a stock is purchased for $12.50 per share and held one year, during which time a $1.50 dividend is

paid and the price drops to $10.75, the percentage return is:

A) -1%. B) 2%. C) 1%. D) -2%.

Answer: D

23) What is the approximate variance of returns if over the past three years an investment returned 8.0

percent, -12.0 percent, and 15.0 percent?

A) 1.31% B) 0.31% C) 9.61% D) 1.82%

Answer: A

24) Calculate the inflation rate, given a nominal rate of 10.2% and a real rate of 8.05%.

A) 1.99% B) 2.49% C) 1.06% D) 2.99%

Answer: A

25) What is the approximate standard deviation of returns if over the past four years an investment

returned 8.0%, -12.0%, -12% and 15.0%?

A) 11.26% B) 12.26% C) 10.26% D) 9.26%

Answer: C

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