Multiple Choice
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1. A security has an expected return of 10% and a standard deviation of .03. If the security is normally distributed, about 68% of the time the security return will be:
(A) Between 4% and 10%.
(B) Between 7% and 10%.
(C) Between 7% and 13%.
(D) Between 10% and 13%
2. Kids Toy Co. has had total returns over the past five years of 0%, 7%, -2%, 10%, and 12%. What is the mean and variability percent return of this stock?
(A) 6.75%; 6.15%
(B) 5.40%; 6.15%
(C) 6.75%; 6.33%
(D) 5.40%; 5.50%
3. From 1926 to 1994, total annual returns on common stocks averaged 12.2%, small company stocks averaged 17.4%, long-term government bonds averaged 5.2%, and Treasury Bills averaged 3.7%. What was the average risk premium earned by long-term Government Bonds, and small company stocks respectively?
(A) 8.5%; 1.5%
(B) 0; 12.2%
(C) 1.5%; 13.7%
(D) 1.5%; 7.0%
4. A sample of four returns observations for the Malta Stock Fund is as follows:
0.0725
0.056
0.125
0.010
What are the mean and variance of these returns?
(A) 6.50%, 16.9
(B) 6.60%, 22.5
(C) 26.35%, 67.6
(D) 8.80%, 16.9
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