QUESTION 5

1. Which of the following stock examples would be considered the most risky when using the Coefficient of Variation?

   A stock with a standard deviation of 54.59 and an expected return of 15%

   A stock with a standard deviation of 25.65 and an expected return of 10%

   A stock with a standard deviation of 54.59 and an expected return of 10%

   A stock with a standard deviation of 25.65 and an expected return of 15%

   QUESTION 6

   What is the expected return of a portfolio that contains the following three stocks?

   Stock A -- $50,000 invested -- Expected return 9.8% .049

   Stock B -- $40,000 invested -- Expected return 10.1% .0404

   Stock C -- $10,000 invested -- Expected return 12.3%

   9.56%

   12.5%

   7.59%

   10.17%

   QUESTION 7

   Which of the following is true?

   Positively correlated stocks provide the highest level of stand alone risk aversion.

   Positively correlated stocks provide the highest level of diversification.

   Negatively correlated stocks provide the highest level of diversification.

   Negatively correlated stocks provide the highest level of stand alone risk aversion.

   QUESTION 8

   The value of a stock is the present value of the stocks future cash flows. This includes:

   future dividends, interest received on stock, and the price received when the stock is sold.

   Interest received on stock and the price received when the stock is sold.

   Only future dividends

   future dividends and the price received when the stock is sold.

   QUESTION 9

   If D₁ = 1.50, and g = 6%, what is D₂?

   		$9.00
   		$1.75
   		$1.41
   		$1.59