You've observed the following returns on INTC Corporation's stock over the past five years: -25%, -16%, -9%, 11%, and 18%. Answer Questions 1 - 6.

1. You've observed the following returns on INTC Corporation's stock over the past five years: -25%, -16%, -9%, 11%, and 18%. Answer Questions 1 - 6.
2. What is the arithmetic average return on the stock over this five-year period?
3. a.10.7%
4. b.9.6%
5. c.-8.8%
6. d.-4.2%

2 points  

QUESTION 2

1. What is the variance of returns over this period?
2. a.0.03297
3. b.0.04878
4. c.0.07432
5. d.0.06684

2 points  

QUESTION 3

1. What is the standard deviation of returns over this period?
2. a.16.89%
3. b.20.35%
4. c.22.09%
5. d.18.16%

2 points  

QUESTION 4

1. Suppose the current T-bill rate is 0.15%. What is the risk premium of owing INTC Corporation's stock?
2. a.-4.35%
3. b.11.10%
4. c.-8.10%
5. d.9.45%

1 points  

QUESTION 5

1. What range of returns would you expect to see 95% of the time?
2. a.-40.52% to 32.12%
3. b.-12.49% to 31.69%
4. c.9.6% to 22.09%
5. d.-34.57% to 53.77%

2 points  

QUESTION 6

1. What is the geometric average return on the stock over this five-year period?
2. a.-5.57%
3. b.8.49%
4. c.7.62%
5. d.-9.60%

1 points  

QUESTION 7

1. Suppose you have $20,000 total. If you put $14,000 in Stock A and the remainder in Stock B, what will be the expected return on your portfolio?
2. State of Economy
3. Probability
4. Return on A
5. Return on B
6. Recession
7. 0.2
8. -20%
9. 30%
10. Normal
11. 0.5
12. 10%
13. 20%
14. Boom
15. 0.3
16. 70%
17. 50%
18. a.10.90%
19. b.24.70%
20. c.14.50%
21. d.28.50%

2 points  

QUESTION 8

1. Following Question 7, what will be the standard deviation on your portfolio?
2. a.18.01%
3. b.24.32%
4. c.26.61%
5. d.20.75%

2 points  

QUESTION 9

1. Stock Y has a beta of 1.50 and an expected return of 16%. Stock Z has a beta of 0.70 and an expected return of 11.5%. The market risk premium is 8%. What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other?
2. a.8.67%
3. b.5.29%
4. c.7.56%
5. d.6.78%

2 points  

QUESTION 10

1. A stock has a beta of 0.8, the expected return on the market is 11%, and the risk-free rate is 0.5%. What must the expected return on this stock be?
2. a.10.50%
3. b.8.90%
4. c.4.40%
5. d.12.30%

2 points  

QUESTION 11

1. You have $10,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 16% and Stock Y with an expected return of 11%. If your goal is to ensure a portfolio with an expected return of 14.25%, how much money will you invest in stock X? In Stock Y?
2. a.X: $6,500; Y: $3,500
3. b.X: $4,500; Y: $5,500
4. c.X: $3,500; Y: $6,500
5. d.X: $5,500; Y: $4,500