11. You bought a share of stock for $100. It is now worth $105 and has just paid an annual dividend of $2 per share.

a. What was the dividend yield?

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b. What was the capital gains yield?

c. What was the total rate of return?

12. The risk premium is _____.

Check all that apply:

a. the difference between the expected rate of return on an asset and the risk-free rate

b. normally zero for risky assets

c. the reward for bearing risk

d. normally positive for risky assets

13. Below are the expected returns for different asset classes for next year:

Asset class |

T-bills |

Corporate bonds |

Small company stocks |

Large company stocks |

a. What is the risk premium for corporate bonds?

b. What is the risk premium for small company stocks?

c. What is the risk premium for largecompany stocks?

14. A mutual fund delivered the following annual returns over the last 4 years:

Year | 2 | 3 | 4 |

Return7% 3% 13%. 6%

a. If you had invested $4,000 at the beginning of the period, what would be the value of your money after 4 years?

b. What was the geometric average return over the 4 years?

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