1.Using historical risk premiums from Table 5.5 over the 19272018 period as your guide, what would be your estimate of the expected annual HPR on the Big/Value portfolio if the current risk-free interest rate is 1.70%? (Round your answer to 2 decimal places.)

2. The continuously compounded annual return on a stock is normally distributed with a mean of 24% and standard deviation of 31%. With 95.45% confidence, we should expect its actual return in any particular year to be between which pair of values? Hint: Refer to Figure 5.3.

multiple choice

38.0% and 86.0%

28.0% and 86.0%

24.7% and 72.7%

12.5% and 62.5%

Which is the answer?