QUESTION: 169

If Paola Pizza Parlors stock started the year at $10 per share, paid $0.50 in cash dividends during the year, and ended the year ay $11.50 per share, then the total investment yield or rate of return for the year would be:

0.30
0.10
0.50
0.20

Answer(s): D

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QUESTION: 170

Which of the following is/are NOT out of components of the discount rate?

A "Risk-free rate" (the amount that an investor feels certain of realizing over the holding period). This includes:
A "rental rate" for forgoing the use of funds over the holding period
The expected rate of inflation over the holding period
A premium for risk, this includes:
Systematic risk (that risk that relates to improvements in returns on the investment market in general)
Unsystematic risk (that risk is specific to the subject investment)
Premium value
Discount rate

Answer(s): C,D

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QUESTION: 171

The state of the art in the twenty-first century involves incorporating one or all of the following elements into the discount rate to reflect risk EXCEPT:

A basic equity risk premium over the risk free rate selected as the base
One or more coefficients modifying the basic equity risk premium based on industry or other characteristics that are expected to affect the degree of risk for the subject investment
An element reflecting the size effect
None of these

Answer(s): D

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