1. Stock A has an expected return of 14% and standard deviation 35%, and stock B has an expected return of 9% and a standard deviation of 15%. The correlation coefficient between A and B is +1. Assume no short selling is allowed. What is the expected return and standard deviation on the minimum variance portfolio consisting of A and B? A) 11.5%; 0% B) 9%; 15% C) 11.5%; 25% D) 7%; 12% E) None of the above

2. Lets assume you hold a portfolio consisting of two stocks (A and B). The standard deviation of Stock A is 15%. The standard deviation of stock B is 25%. You have positive weights in each stock. The standard deviation of the portfolio consisting of stocks A and B can equal which of the following: A) a value over 25% B) a value under 15% C) a value between 15% and 25% D) B and C are both correct.

3. In the phenomenon known as post-earnings announcement drift, abnormal returns in the weeks after earnings news continue to appear in the same direction as the news. According to this phenomenon, investors ________ to favorable earnings surprises and _________ to unfavorable earnings surprises. A) underreact; overreact B) underreact; underreact C) overreact; overreact D) overreact; underreact