1. The expected return is 10% and the standard deviation is 6%. What is the probability of earning a return less than 22%? Assume that returns are normally distributed.

a. 13.5%

b. 2.5%

c. 97.5%

d. 68%

e. 16%

2. A stock that is above the Security Market Line is supposed to be what?

a. The Security Market Line tells you nothing about the value of a stock

b. overpriced

c. correctly priced

d. underpriced

e. too risky