Investment Return

Question 1

If a stock is sold before the ex-dividend date, but not delivered by the record date, what must be attached?

Answer 1

A due bill

Question 2

What yield would be disclosed for a bond purchased at a discount?

Answer 2

YTM

Question 3

True or False: The ex-dividend date is one day before the record date.

Answer 3

False. The ex-date and record date are the same day.

Question 4

What is the formula for calculating inflation-adjusted return?

Answer 4

Actual Rate of Return - Inflation Rate

Question 5

What is the formula for calculating a stock’s current yield?

Answer 5

Annual Dividend ÷ Current Market Price

Question 6

An investor buys 100 shares at $10 and gets a $0.50 dividend. If the shares are sold at $12, what is the total return?

Answer 6

25% = [($12 - $10) + $.50] ÷ $10

Question 7

What is the formula for calculating total return?

Answer 7

[(Sale Price - Purchase Price) + Dividend or Interest] ÷ Purchase price

Question 8

_____________ return measures how much an investment returns in relation to the risk that was assumed to attain it.

Answer 8

Risk Adjusted

Question 9

Of what information must buyers of callable bonds be made aware?

Answer 9

The call date(s) and price(s) that may be found in the bond’s indenture

Question 10

What is the formula for calculating a bond’s current yield?

Answer 10

Annual Interest ÷ Current Market Price

Question 11

What is the current yield on a 4% coupon bond selling at 50?

Answer 11

$40 ÷ $500 = 8%