1. The returns on the stock of COSTA Corp. over the last 4 years are as follows: 2016: +10%, 2017: -8%, 2018: +12%, and 2019: -5%. What was the realized annual return?

Select one:

a. None of THESE

b. +1.87%

c. +2.25%

d. +4.29%

e. -1.57%

2. Stock A has a standard deviation of 10% and stock B has a standard deviation of 16%. Both stocks have a correlation coefficient of zero and the same expected return of 8%. If the two stocks are combined equally in a portfolio, what would be the portfolio standard deviation?

Select one:

a. 11.36%

b. 9.43%

c. 13%

d. 8%

3. A way to mitigate agency costs between managers and shareholders is giving performance bonus to managers.

Select one:

True

False

4. Which of the following statements is true?

Select one:

a. All of THESE

b. An indenture is a written agreement between a borrower and lender establishing the terms of a loan.

c. A protective covenant is, for example, the collateral on a bonds issue to back up the loan.

d. The yields on preferred shares are usually lower than those from bonds