FINN 3063 INVESTMENTS EXAM 1
PROBLEMS | QUESTIONS AND ANSWERS |
100% CORRECT 2026!!
An investment has an expected return of 12 percent per year with a
standard deviation of 6 percent.
Assume that the returns on this investment are at least roughly
normally distributed. - ANSWERS-How frequently do you expect a
return between 6% and 18%? 68%
How frequently do you expect a return greater than 18%? 16%
How frequently do you expect to lose money? 2.5%
Sakaar Inc. has had the following returns over the last four years: 10%,
10%, -20%, 25% - ANSWERS-What is the arithmetic average return for
the last four years?
(10% + 10%+ -20% + 25%) / 4 = 6.25%
What is the geometric average return for the last four years?
[(1 + 0.1)(1 + 0.1)(1-0.2)*(1+0.25)]^ (1/4) -1 = 4.88%
Within each class, which specific securities should you buy? Does
security selection work? - ANSWERS-Security Selection
PROBLEMS | QUESTIONS AND ANSWERS |
100% CORRECT 2026!!
An investment has an expected return of 12 percent per year with a
standard deviation of 6 percent.
Assume that the returns on this investment are at least roughly
normally distributed. - ANSWERS-How frequently do you expect a
return between 6% and 18%? 68%
How frequently do you expect a return greater than 18%? 16%
How frequently do you expect to lose money? 2.5%
Sakaar Inc. has had the following returns over the last four years: 10%,
10%, -20%, 25% - ANSWERS-What is the arithmetic average return for
the last four years?
(10% + 10%+ -20% + 25%) / 4 = 6.25%
What is the geometric average return for the last four years?
[(1 + 0.1)(1 + 0.1)(1-0.2)*(1+0.25)]^ (1/4) -1 = 4.88%
Within each class, which specific securities should you buy? Does
security selection work? - ANSWERS-Security Selection
