1) In a positively skewed distribution of returns:

A. the mean return is higher than the mode

B. the mean return is lower than the mode

C. the mean and mode are equal

2) Suppose an investment has normally distributed returns with mean 6% and standard deviation 15%. The percentage of returns greater than 21% can be expected to be:

A. 68%

B. 95%

C. 32%

D. 16%

3) A normal distribution:

A. has mean, mode and median that are equal

B. has equal probability of a return of x% and x%

C. both (A) and (B) are true

D. none of the above

4) A real rate of return:

A. is always lower than the nominal rate of return

B. is always negative when the nominal rate of return is negative

C. is always positive when the nominal rate of return is positive

D. is higher than the nominal rate of return when the economy experiences deflation

5) A normal distribution:

A. has symmetry around the mean

B. will be relatively flat if the distribution has a relatively high standard deviation

C. both (A) and (B) are true

D. none of the above

6) A normal distribution of returns:

A. has returns which are relatively consistent from one period to the next

B. has an equal likelihood of positive and negative returns

C. both (A) and (B) are true

D. none of the above

7) Suppose an investment has normally distributed returns with mean 5% and standard deviation 20%. The percentage of returns greater than 45% can be expected to be:

A. 5%

B. 95%

C. 2.5%

D. 32%