bmaggie

An investor has the following assets:

• $5,000 in bonds with an expected return of 8%.
• $10,000 in equities with an expected return of 12%.
• $5,000 in real estate with an expected return of 10%.

What is the portfolio's expected return?

A) 10.00%.

B) 10.50%.

C) 11.00%.

bmaggie

Which of the following statements about a normal distribution is least accurate?

A) Approximately 68% of the observations lie within +/- 1 standard deviation of the mean.

B) The mean and variance completely define a normal distribution.

C) A normal distribution has excess kurtosis of three.

bmaggie

Which of the following statements about a normal distribution is least accurate?

A) Approximately 68% of the observations lie within +/- 1 standard deviation of the mean.

B) The mean and variance completely define a normal distribution.

C) A normal distribution has excess kurtosis of three.

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Even though normal curves have different sizes, they all have identical shape characteristics. The kurtosis for all normal distributions is three; an excess kurtosis of three would indicate a leptokurtic distribution. Both remaining choices are true.

bmaggie

An investor has a $15,000 portfolio consisting of $10,000 in stock A with an expected return of 20% and $5,000 in stock B with an expected return of 10%. What is the investor’s expected return on the portfolio?

A) 16.7%.

B) 12.2%.

C) 7.9%.

bmaggie

An investor has a $15,000 portfolio consisting of $10,000 in stock A with an expected return of 20% and $5,000 in stock B with an expected return of 10%. What is the investor’s expected return on the portfolio?

A) 16.7%.

B) 12.2%.

C) 7.9%.

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Find the weighted mean where the weights equal the proportion of $15,000. [(10,000 / 15,000) × 0.20] + [(5,000 / 15,000 × 0.10] = 16.7%.

bmaggie

An investor has a portfolio with 10% cash, 30% bonds, and 60% stock. If last year’s return on cash was 2.0%, the return on bonds was 9.5%, and the return on stock was 25%, what was the return on the investor’s portfolio?

A) 18.05%.

B) 36.50%.

C) 22.30%.

bmaggie

An investor has a portfolio with 10% cash, 30% bonds, and 60% stock. If last year’s return on cash was 2.0%, the return on bonds was 9.5%, and the return on stock was 25%, what was the return on the investor’s portfolio?

A) 18.05%.

B) 36.50%.

C) 22.30%.

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Find the weighted mean of the returns. (0.10 × 0.02) + (0.30 × 0.095) + (0.60 × 0.25) = 18.05%

bmaggie

What is the compound annual growth rate for stock A which has annual returns of 5.60%, 22.67%, and -5.23%?

A) 7.08%.

B) 6.00%.

C) 8.72%.

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Compound annual growth rate is the geometric mean. (1.056 × 1.2267 × 0.9477)^1/3 – 1 = 7.08%

bmaggie

Find the mean, median, and mode, respectively, of the following data:

3, 3, 5, 8, 9, 13, 17

A) 8.28; 8; 3.

B) 8; 8.28; 3.

C) 3; 8.28; 8.

bmaggie

Find the mean, median, and mode, respectively, of the following data:

3, 3, 5, 8, 9, 13, 17

A) 8.28; 8; 3.

B) 8; 8.28; 3.

C) 3; 8.28; 8.

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Mean = (3 + 3 + 5 + 8 + 9 + 13 + 17) / 7 = 8.28; Median = middle of distribution = 8 (middle number); Mode = most frequent = 3.