2. The excess return is computed by ______ the average return for the investment.

A: subtracting the inflation rate from

B: adding the inflation rate to

C: subtracting the average return on the U.S. Treasury bill from

D: adding the average return on the U.S. Treasury bill to

E: subtracting the average return on long-term government bonds from

3. You purchased 300 shares of stock at a price of $21.72 per share. Over the last year, you have received total dividend income of $210. What is the dividend yield?

A: 3.06 percent

B: 3.22 percent

C: 3.17 percent

D: 2.92 percent

E: 2.94 percent

4.Soo Lee owns a stock that has had annual returns of 11.6 percent, 9.3 percent, 22.8 percent, and 34.6 percent over the last four-year period. What is his arithmetic mean return on this investment?

A: 7.94 percent

B: 19.58 percent

C: 14.62 percent

D: 11.47 percent

E: 8.18 percent

5. Soo Lee owns a stock that has had annual returns of 11.6 percent, 9.3 percent, 22.8 percent, and 34.6 percent over the last four-year period. What is his arithmetic mean return on this investment?

A: 7.94 percent

B: 19.58 percent

C: 14.62 percent

D: 11.47 percent

E: 8.18 percent

6. Stock A is expected to return 14 percent in a normal economy and lose 21 percent in a recession. Stock B is expected to return 11 percent in a normal economy and 5 percent in a recession. The probability of the economy being normal is 75 percent and being recessionary is 25 percent. What is the covariance of these two securities?

A: .007006

B: .006563

C: .005180

D: .007309

E: .006274