Financial Market History: Risk and Return
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Questions and Answers

What is the goal of the chapter 'A Brief History of Risk and Return'?

  • To discuss the impact of technology on investment strategies
  • To compare different investment vehicles
  • To explore the relationship between risk and return in financial market history (correct)
  • To analyze current market trends

    • What is the total dollar return on an investment?

  • The percentage increase in stock price
  • The initial amount invested in the stock
  • The return measured in dollars accounting for all cash flows and capital gains or losses (correct)
  • The total dividends received from the investment

    • What does total percent return measure?

  • The annual profit of a company as a percentage of its revenue
  • The return as a percentage of the originally invested sum accounting for all cash flows and capital gains or losses (correct)
  • The dividend yield of a stock
  • The average price change of a stock over a period

    • In the example, how is the percent return calculated?

    <p>Dividend + Capital gains on stock yield / Beginning stock price</p> Signup and view all the answers

    If $1,000 was invested in a stock at $25 per share, what is the total dollar return if the stock price increases to $30 per share and dividends of $50 are received?

    <p>$150 (Dividends: $50, Capital gain: $100)</p> Signup and view all the answers

    What is the primary focus of Chapter 2 'Buying and Selling Securities'?

    <p>Understanding the basics of the investing process</p> Signup and view all the answers

    What are the three traditional groups of brokers mentioned in the text?

    <p>Full-service brokers, discount brokers, deep-discount brokers</p> Signup and view all the answers

    What distinguishes full-service brokers from discount and deep-discount brokers?

    <p>Higher level of service and higher resulting commissions</p> Signup and view all the answers

    What is the goal of discussing important considerations and constraints in the investing process?

    <p>To guide investors as they become more involved in investing</p> Signup and view all the answers

    What are the initial steps involved in getting started with buying and selling securities?

    <p>Opening a brokerage or trading account, depositing money into the account, buying or selling securities, then closing the account</p> Signup and view all the answers

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