1) A firm you are analyzing has had the following returns the past 5 years: 7.0%, 6.0%, -4.0%, 3.0% and 2.0 %. What are the standard deviation and variance of the past five year returns?

0.0432, 0.0019

0.0387, 0.0015

0.0432, 0.0015

2) A stock has had returns of 16.12%, 12.11%, 5.83%, 26.14%, and -13.19% over the past five years. What was the holding period return for the stock?

50.86%

150.86%

58.04%

3) You are constructing a two stock portfolio based on the information provided below. What dollar amount will you invest in each stock to achieve the desired return goal?

Stock X	Stock Y
Expected Return	14.0%	9.0%

Goal Return of Portfolio: 12.90%

Dollar Amount to Invest: $10,000

X = $7,800; Y = $2,200

X = $2,200; Y = $7,800

X = $6,800; Y = $3,200

4) Your stock portfolio contains 4 stocks with the following betas and weight as a percentage of your portfolio. What is the portfolio beta?

Weight	Beta
Stock A	30 pct..	1.80
Stock B	35 pct..	1.50
Stock C	15 pct.	1.38
Stock D	20 pct.	0.80

1.43

1.37

1.40

5) Based on the following information determine the covariance and correlation between the returns of the two stocks.

State of Economy	Probability of State of Economy	Return of X	Return of Y
Bear	0.10	-0.03	0.05
Normal	0.65	0.11	0.062
Bull	0.25	0.25	0.092

Cov = 0.001086, Corr=0.9589

Cov = 0.001086, Corr=0.00019

Cov= 0.001092, Corr=0.9327

1) A firm you are analyzing has had the following returns the past 5 years: 7.0%, 6.0%, -4.0%, 3.0% and 2.0 %. What are the standard deviation and variance of the past five year returns? 0.0432, 0.0019 0.0387, 0.0015 0.0432, 0.0015 2) A stock has had returns of 16.12%, 12.11%, 5.83%, 26.14%, and -13.19% over the past five years. What was the holding period return for the stock? 50.86% 150.86% 58.04% 3) You are constructing a two stock portfolio based on the information provided below. What dollar amount will you invest in each stock to achieve the desired return goal? Expected Return Goal Return of Portfolio: 12.90% Dollar Amount to Invest: $10,000 Stock X Stock Y 14.0% 9.0% X = $7,800; Y = $2,200 X = $2,200; Y = $7,800 X = $6,800; Y = $3,200 4) Your stock portfolio contains 4 stocks with the following betas and weight as a percentage of your portfolio. What is the portfolio beta? Weight Beta Stock A 30 pct.. 1.80 Stock B 35 pct.. 1.50 Stock C 15 pct. 1.38 Stock D 20 pct. 0.80 1.43 1.37 1.40 5) Based on the following information determine the covariance and correlation between the returns of the two stocks. State of Economy Probability of State of Economy Return of X Return of Y Bear 0.10 -0.03 0.05 Normal 0.65 0.11 0.062 Bull 0.25 0.25 0.092 Cov = 0.001086, Corr=0.9589 Cov = 0.001086, Corr=0.00019 Cov= 0.001092, Corr=0.9327