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# 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.

- 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.
- What is the arithmetic average return on the stock over this five-year period?
- a.10.7%
- b.9.6%
- c.-8.8%
- d.-4.2%

**2 points **

QUESTION 2

- What is the variance of returns over this period?
- a.0.03297
- b.0.04878
- c.0.07432
- d.0.06684

**2 points **

QUESTION 3

- What is the standard deviation of returns over this period?
- a.16.89%
- b.20.35%
- c.22.09%
- d.18.16%

**2 points **

QUESTION 4

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

**1 points **

QUESTION 5

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

**2 points **

QUESTION 6

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

**1 points **

QUESTION 7

- 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?
- State of Economy
- Probability
- Return on A
- Return on B
- Recession
- 0.2
- -20%
- 30%
- Normal
- 0.5
- 10%
- 20%
- Boom
- 0.3
- 70%
- 50%
- a.10.90%
- b.24.70%
- c.14.50%
- d.28.50%

**2 points **

QUESTION 8

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

**2 points **

QUESTION 9

- 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?
- a.8.67%
- b.5.29%
- c.7.56%
- d.6.78%

**2 points **

QUESTION 10

- 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?
- a.10.50%
- b.8.90%
- c.4.40%
- d.12.30%

**2 points **

QUESTION 11

- 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?
- a.X: $6,500; Y: $3,500
- b.X: $4,500; Y: $5,500
- c.X: $3,500; Y: $6,500
- d.X: $5,500; Y: $4,500