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FIN4443 Chapter 10

Terms in this set (12)

The dividend yield for a one year period is equal to the annual dividend amount divided by the
beginning stock price
A frequency distribution of stock returns displays
-the frequency of occurrence for reach rate of return range
-various ranges of returns on the horizontal axis
The square of the standard deviation is equal to the
variance
Capital Gain Yield:
(Price at Year End - Price Beginning) / Price Beginning
Dividend Yield:
(Dividend End of Year) / (Price Beginning of Year)
Total Return on Investment:
Capital Gain Yield + Dividend Yield
Characteristics of Normal Distribution:
-Bell Shaped
-Symmetrical
The Ibboston SBBI data shows that
-T-Bills had the lowest risk or variability
-long-term corporate bonds had less risk or variability than stocks
-small-company stocks generated the highest average return
-small-company stocks had the highest risk level
The average excess return on common stocks is called the ??? risk premium
equity
The probability of a return being more than two standard deviations below the mean in a normal distribution is approximately ??? percent
2.5%
The ??? mean is the best estimate of next years return
arithmetic
The Sharpe Ratio measures
reward to risk
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