1. Acme Inc.'s stock has a 20% chance of producing a 8% return, a 60% chance of producing a 14% return, and a 20% chance of producing a 10% return. What is the standard deviation (not the variance!) of the returns to Acmes stock?

a. 2.53%

b. 2.57%

c. 2.45%

d. 2.32%

e. 2.68%

2. What is the price of a zero coupon (1,000 face value) bond with five years to maturity when the required rate of return is 4%?

a. $837.48

b. $747.26

c. $821.93

d. $822.70

e. $839.62