5.

value: 3.00 points

Assume that for a 5-year period, large-company stocks had annual rates of return of 29.54 percent, 10.80 percent, 13.59 percent, 13.60 percent, and 37.39 percent. What is the variance of these returns?

.0647

.0679

.0701

.0613

6.

value: 2.00 points

Risk and reward are:

directly related.

inversely related.

unrelated.

related but the relationship is undefined.

7.

value: 2.00 points

Which one of the following statements is correct?

Bonds have higher expected risk premiums than do stocks.

The higher the expected rate of return, the lower the expected risk premium.

The higher the standard deviation of returns, the higher the expected risk premium.

The market risk premium is identical for all industrialized nations.