1. You pay $1000 to buy an asset that will pay you a single amount in one year. You have tracked how this type of asset has performed over many prior years and noticed that there is a 7 out of 10 chance that it pays $1,150 and that otherwise it pays $1,050. What is your "expected rate of return?" Express in decimal form accurate and rounded to 4 decimal places, e.g., if you solved for 0.15118, it should be expressed as 0.1512 (not 0.1511, not 0.15118, not 15.12%, etc.). Enter your numerical answer only...do not include an equals sign, a space, any text, punctuation, etc. Enter your numerical answer only...do not include an equals sign, a space, any text, punctuation, etc. (a negative sign is okay if appropriate for your answer).

2.

You are considering buying a 1-year maturity security that has a 40.00% chance of paying you $105 in one year and a 60.00% chance of paying you $142 in one year. You are willing to pay at most $103.00. What is your required rate of return? Express in decimal form accurate and rounded to 4 decimal places, e.g., if you solved for 0.15118, it should be expressed as 0.1512 (not 0.1511, not 0.15118, not 15.12%, etc.).

Enter your numerical answer only...do not include an equals sign, a space, any text, punctuation, etc. Enter your numerical answer only...do not include an equals sign, a space, any text, punctuation, etc. (a negative sign is okay if appropriate for your answer).

3.Suppose one year ago you paid $P for a stock which you sold today for $100. The stock did not pay any dividends and there were no other cash flows other than you purchase a year ago and your sale today. Your realized rate of return was 0.16. Rounded to the nearest penny, what is the value of P? (Round to two decimal places and do not include the dollar sign. For example, if you solved for $50.126 you should answer, without a dollar sign, 50.13.) Enter your numerical answer only...do not include an equals sign, a space, any text, punctuation, etc. Enter your numerical answer only...do not include an equals sign, a space, any text, punctuation, etc. (a negative sign is okay if appropriate for your answer).

4.

Consider the following discrete probability distribution for the random variables X and Y:

Probability X Y 0.30 2 9 0.40 5 4 0.30 8 3

Accurate accurate and rounded to one decimal place (e.g., 3.2), what is the covariance between X and Y?