# Study Guide Essay

Words: 6971
Pages: 28

HOMEWORK 1 - MONEY AND BANKING * uestion 1

4 out of 4 points Correct The periodic payments on equity securities are called Answer Selected Answer: dividends. Correct Answer: dividends. * Question 2

0 out of 4 points Incorrect In the United States, the biggest issuers of debt securities are Answer Selected Answer: households. Correct Answer: financial intermediaries. * Question 3

4 out of 4 points Correct In the United States, the biggest issuers of equity securities are Answer Selected Answer:
Which security has the least risk? Note: You can answer this question intuitively, without calculating the standard deviation. However, if you want to calculate the standard deviation, the equation is:

Standard deviation = S = mc066-1.jpg. Investment A: total return = 10 percent with probability 50 percent total return = 20 percent with probability 50 percent Investment B: total return = 12 percent with probability 50 percent total return = 18 percent with probability 50 percent Investment C: total return = 5 percent with probability 60 percent total return = 25 percent with probability 40 percent Answer Selected Answer: Investments A and B have the same risk, which is less than that of investment C. Correct Answer: Investment B * Question 15

4 out of 4 points Correct Risk that cannot be eliminated by diversification is Answer Selected Answer: market risk. Correct Answer: market risk. * Question 16

4 out of 4 points Correct If a stock's price is \$20 at the beginning of a year and \$17 at the end of the year, and it pays a dividend of \$2 during the year, then the stock's return is ____