Use the Table for the Question(s) Below

question 80

Multiple Choice

Use the table for the question(s) below.
Consider the following realized annual returns:

-Suppose that you want to use the 10 year historical average return on Stock A to forecast the expected future return on Stock A.The standard error of your estimate of the expect return is closest to:

• A) 16.4%
• B) 3.32%
• C) 3.15%
• D) 33.20%

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Definitions:

Bond's Yield

The return an investor realizes on a bond, calculated as the interest or dividends received divided by the price of the bond.

Cost of Capital

The rate of return a company must earn on its investments to maintain its market value and satisfy its shareholders and creditors.

NPV

Net Present Value - a calculation used to assess the profitability of a project or investment by summing the present values of all cash flows associated with it.

IRR

Internal rate of return. A capital budgeting technique that rates projects according to their expected return on invested funds. The higher the return the better.