You have the choice of two equally risky annuities, each paying $$5,000$ per year for $8$

years. One is an annuity due and the other is an ordinary annuity. If yous are going to be

receiving the annuity payments, which annuity would you choose to maximize your

wealth?

a$)$ the annuity due

b$)$ the ordinary annuity

c$)$ Since we don't know the interest rate, we can't find the value of the annulties and

hence we cannot tell which one is better.

d$)$ either one because they have the same present value

A stock's beta is a measure of its

a$)$ unsystematic risk.

b$)$ systematic risk.

c$)$ company$-$unique risk.

d$)$ diversifiable risk.

Investment A has an expected return of $15\%$ per year, while Investment B has an

expected return of $12\%$ per year. A rational investor will choose

a$)$ Investment A because of the higher expected return.

b$)$ Investment B because a lower return means lower risk.

c$)$ Investment A if A and B are of equal risk.

d$)$ Investment A only if the standard deviation of returns for $A$ is higher than the

standard deviation of returns for B$.$