Question 11 pts

Tommy wishes to determine the return on two stocks she owned in 2019.

At the beginning of the year, stock X traded for $51per share. During the year, X paid dividends of $9

At the end of the year, Xstock was worth $92

Calculate the annual rate of return, r, for X

(Enter the answer in % format without % sign -> 20.51 and not 20.51% or 0.2051)

Question 21 pts

Suppose you have an investment in a stock that had a negative 50% return (a loss) in the first year and a positive 50% return (a gain) in the second year. The geometric returns is 0%

Group of answer choices

True

False

Question 31 pts

Calculate the standard deviation of this scenario

Outcome 1: Recession. Probability = 40%. Return = 7.38%.

Outcome 1: Recovery. Probability = 60%. Return = 17.27%.

Question 51 pts

The variance of an investments returns is a measure of the:

Group of answer choices

Historic return over long periods

Volatility of the rates of return

Average value of the investment

Probability of a negative return

Question 61 pts

The standard deviations of individual stocks are generally higher than the standard deviation of the market portfolio because individual stocks

Group of answer choices

Do not have unique risk

Offer higher returns

Have more systematic risk

Have no diversification of risk

Question 61 pts

The standard deviations of individual stocks are generally higher than the standard deviation of the market portfolio because individual stocks

Group of answer choices

Do not have unique risk

Offer higher returns

Have more systematic risk

Have no diversification of risk

Question 71 pts

Suppose you hold a portfolio of two stocks in the healthcare industry. The future outcomes for these stocks depend mainly on the next healthcare bill to be passed by Congress. The possible outcomes and returns are:

Outcome	Probability	Return for Stock A	Return for Stock B
1=Republican Bill	0.8	12%	-5%
2=Democratic Bill	0.2	3%	20%

What is the expected return and a standard deviation of a portfolio that has 50% of its value in stock A and 50% in stock B?

Group of answer choices

5.1% and 3.2%

7.5% and 4%

5.1% and 3.2%

9.9% and 3.2%