1) Given the following historical returns, what is the standard deviation?

Year 1 2 3 4 5

Return -30% 23% -10% 16% -7%

2) You purchased 500 shares of stock on December 31, 2012 for $33.45 per share. The stock

pays an annual dividend of $3.50 per share. On December 31, 2013, the market price is $28.39

per share. What is your percentage return on the investment for the year?

3) What is the expected return for the following portfolio?

Asset A B C

Investment $1100 $500 $900

Return 0.15 0.22 0.07

4) Stocks A and B have the following historical returns. If you knew their correlation is 85%,

what is their covariance?

Year 1 2 3 4

Stock A Return 11% 6% 17% 24%

Stock B Return 7% -5% 23% 18%