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If you were to compare the returns of an individual share to a market index, select the answer below that is most true. Select one:
If you were to compare the returns of an individual share to a market index, select the answer below that is most true.
Select one:
A. The returns of the individual share will show more variability than those of the market index.
B. The returns of the individual share will show less variability than those of the market index.
C. The returns of the individual share will show the same level of variability than those of the market index, if they have the same beta.
D. None of the above.
Q2 You have chosen a finance major because you would like to be an investment banker. You think that your chance of getting a well-paid job in an investment bank is about 20 per cent. If you get the job you will have a starting salary of $300,000 per year. However, if you don't make the cut then you will work at a fast food outlet for $40,000 per year. What is the standard deviation of your expected starting salary?
