1.Terry Dactel is considering the purchase of an asset having the following cash flows:

Ki Prob.

$600 .20

-$900 .30

$1100 .30

$400 .20

What is the standard deviation of the asset's cash flows?

$801

$744

$694

$602

none of the above are correct

2.

Polly Khan is trying to calculate the risk-free rate given the following information: The current market rate of interest is 12%. Investors have been requiring a 17% annual return on Builtrites stock which has a beta of 2.0. What is the current risk-free rate?

4%

5%

6%

7%

3.

Barry Cuda is considering three different investments. He, like most investors, is concerned about minimizing risk. Using the following information, which investment appears to have the least amount of risk relative to its expected return?

Investment A: expected return was calculated to be $18,000 with a standard deviation of $9000.

Investment B: expected return was calculated to be 15% with a standard deviation of 6%.

Investment C: expected return was calculated to be 20% with a standard deviation of 7%.

Investment A

Investment B

Investment C

Either Investment B or C