Page 97 - CAPE Financial Services Syllabus Macmillan_Neat

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16. Sandra is a risk-averse investor. Which of the following statements regarding Sandra is
CORRECT?

(A) Sandra will only care about the rate of return on her investment
(B) Sandra will accept any investment that is a fair game.
(C) Sandra is willing to accept lower returns and high risk.
(D) Sandra will only accept risky investments that offer risk premiums over the risk-

free rate.

17. Which of the following statement on markets is NOT correct?

(A) Semi-strong form market efficiency only uses information provided by the company
to the general public.

(B) Semi-strong form market efficiency requires all information on past prices to be
included into the price.

(C) Publicly available information is not included in weak-form efficient markets.
(D) Strong-form efficient markets include privately held information.

18. Mr. Wellington purchased a share of stock for $25. One year later he received $1 as
dividend and sold the share for $34.
What was Mr. Wellington’s holding period return?

(A) 32%
(B) 40%
(C) 49%
(D) 55%

19. If the return on common stock investment is on average 25% and the return on Trinidadian
Government T. bills is 5% over the same period, what is the risk premium earned?

(A) 5%
(B) 13%
(C) 20%
(D) 23%

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