Deck 1: The Investment Setting: Part A

Question 1

Refer to Exhibit 1A.2. The expected return for project X is

A) 0.0 percent.
B) 0.5 percent.
C) 2.5 percent.
D) 5.0 percent.
E) 7.5 percent.

Answer 1

C

Question 2

Refer to Exhibit 1A.1. The standard deviation of your expected return from this investment is

A) 0.001.
B) 0.004.
C) 0.124.
D) 1.240.
E) None of these are correct.

Answer 2

C

Question 3

-Refer to Exhibit 1A.1. The expected return from this investment is

A) -0.0752.
B) -0.0040.
C) 0.00.
D) 0.0075.
E) 0.4545.

Answer 3

0.0075.

Question 4

-Refer to Exhibit 1A.2. The standard deviation for project X is

A) -1.581 percent.
B) 0.000 percent.
C) 1.581 percent.
D) 2.738 percent.
E) 5.000 percent.

Question 5

-Refer to Exhibit 1A.1. The coefficient of variation of this investment is

A) -0.06.
B) -0.65.
C) 6.60.
D) 16.53.
E) 165.10.

Question 6

An investment has a standard deviation of 12 percent and an expected return of 7 percent. What is the coefficient of variation for this investment?

A) 1.714
B) 1.372
C) 0.714
D) 0.583
E) 0.500