1.You have been presented with a report that indicates that the mean of the monthly return on T bills is at 0.25% and the standard deviation is at 0.36%. Moreover, the report states that the mean of the monthly return for S&P 500 is 1.09% and its standard deviation is at 7.3%. Which investment would you prefer?*

a.S&P 500 as it has a smaller MAD

b.S&P 500 as it has the highest return

c.T bill as for every extra unit of return, the investor will take a lower additional risk as compared to S&P 500 of S&P 500

d.Option 5

e.T bill as it has the lowest risk

2.An analyst gathered the following information about the return distributions for two portfolios during the same period: Portfolio A has skewness of -1.3 and kurtosis of 2.2 and Portfolio B has skewness of 0.5 and kurtosis of 3.5. The analyst stated that the distribution of portfolio A is more peaked than a normal distribution and that the distribution for portfolio B has a long tail on the left side of the distribution. Which of the following statements are most true?*

a.The statement is not correct in reference to either portfolio

b.The statement is correct in reference to portfolio A, but the statement is not correct in reference to portfolio B.

c.The statement is not correct in reference to portfolio A, but the statement is correct in reference to portfolio B.

d.The statement is correct in reference to both portfolios