1) The variance of an investment's returns is a measure of the:

	A.	volatility of the rates of return.
	B.	probability of a negative return.
	C.	historic return over long time periods.
	D.	average value of the investment.

2) In a year in which common stocks offered an average return of 18% and Treasury bills offered 7%. The risk premium for common stocks was:

	A.	1%
	B.	3%
	C.	18%
	D.	11%

3)A stock is expected to return 11% in a normal economy, 19% if the economy booms, and lose 8% if the economy moves into a recessionary period. Economists predict a 65% chance of a normal economy, a 25% chance of a boom, and a 10% chance of a recession. What is the expected return on the stock in percentage?