QUESTION 11

1. Jay, who lives in London, invested 4 million in JMDJ, a U.S. company, trading at a market value of $100 per share. The conversion rate for pounds to dollars was 1 to $1.4 at the time of the investment. Assume that after two years, he sells the stock, for $250 per share when the conversion rate for pounds to dollars is 1 to $1.30. How much is his gain?

   		a. 6.8 million.
   		b. 8.4 million.
   		c. 10 million.
   		d. 10.8 million.

QUESTION 12

1. Caroline is considering an investment in Cate Enterprises (CE) or the one-year Treasury, which has a yield of 3%. CE has an average return of 15% with a standard deviation of 12%. Assuming the returns are normally distributed, what is the probability that CE will have a return greater than the Treasury security?

   		a. 84%.
   		b. 68%.
   		c. 34%.
   		d. 16%.