QUESTION 8

1. You have the following rates of return for a risky portfolio for several recent years:

   year	return
   2008	-20%
   2009	30%
   2010	5%

   The annualized (geometric) average return on this investment is _____.

   		7.65%
   		5.41%
   		3.54%
   		2.98%

0.3 points

QUESTION 9

1. Suppose you pay $9,500 for a $10,000 par Treasury bill maturing in 9 months. What is the effective annual rate of return for this investment?

   		6.38%
   		4.25%
   		7.08%
   		2.58%

0.3 points

QUESTION 10

1. The price of a stock is $55 at the beginning of the year and $50 at the end of the year. If the stock paid a $2 dividend and inflation was 2%, what is the real holding-period return for the year?

   		-3.64%
   		-6.44%
   		-7.3%
   		-5.24%