Tommie has made an investment that will generate returns that are based on the state of the economy during the year. Use the following information to calculate the standard deviation of the return distribution for Tommie's investment. Do not round intermediate computations. Round your final answer to four decimal places.

state$/$return$/$probability

weak $/13\%/0\mathrm{.}33$

OK $/20\%/0\mathrm{.}33$

Great $/25\%/0\mathrm{.}34$

A$.0\mathrm{.}0495$

B$.0\mathrm{.}0493$

C$.0\mathrm{.}0467$

D$.0\mathrm{.}0481$

Given the distributions of returns for the following two stocks, calculate the covariance of the returns for the two stocks. Assume the expected return is $10\mathrm{.}8$ percent for Stock $1$ and $9\mathrm{.}7$ percent for Stock $2.$

Prob $/$ stock $1/$ staock $2$

$0\mathrm{.}4/0\mathrm{.}10/0\mathrm{.}12$

$0\mathrm{.}5/0\mathrm{.}11/0\mathrm{.}08$

$0\mathrm{.}1/0\mathrm{.}17/0\mathrm{.}13$

A$.0\mathrm{.}717507$

B$.0\mathrm{.}000516$

C$.0\mathrm{.}000094$

D$.0\mathrm{.}000114$

The expected return on a given stock is $13\mathrm{.}6\%.$ The risk$-$free rate is $4\%.$ The expected return on the market is $10$ percent. What is the stocks beta?

A$.1\mathrm{.}60$

B$.2\mathrm{.}80$

C$.2\mathrm{.}10$

D$.1\mathrm{.}26$

Company A has a beta of $0\mathrm{.}65,$ while Company B$\text{'}$s beta is $1\mathrm{.}20.$ The required return on the stock market is $11\mathrm{.}00\%,$ and the risk$-$free rate is $4\mathrm{.}25\%.$ What is the difference between A$\text{'}$s and B$\text{'}$s required rates of return?

A$.3\mathrm{.}71\%$

B$.2\mathrm{.}75\%$

C$.3\mathrm{.}38\%$

D$.3\mathrm{.}05\%$

An investor recently acquired some risky assets that caused its beta to increase by $40\%.$ What is the stock's new expected rate of return according to the CAPM?

Initial beta $1\mathrm{.}00$

Initial expected return $($rs$)10\mathrm{.}20\%$

Market risk premium, E$($Rm $-$ Rrf $)6\mathrm{.}00\%$

Percentage increase in beta $40\mathrm{.}00\%$

Increase in inflation premium $2\mathrm{.}00\%$

A$.14\mathrm{.}7\%$

B$.15\mathrm{.}4\%$

C$.12\mathrm{.}6\%$

D$.12\mathrm{.}0\%$

Which of the items below is a good example of things that are positively correlated?

A$.$ Time spent on leisure activities and test scores.

B$.$ Hours a week spent exercising and body fat levels.

C$.$ Outside temp and ice cream sales.

D$.$ Shoe size and television shows watched per week.

Sharpe ratio measures.

A$.$ Which investment is the best.

B$.$ The expected increase or decrease of an individual stock price in proportion to movements of the stock market.

C$.$ Systematic risk in a portfolio.

D$.$ Market Risk Premium achieved for every unit of risk taken.