Question

1)

You decide to invest in a portfolio consisting of 20 percent Stock A, 52 percent Stock B, and the remainder in Stock C. Based on the following information, what is the variance of your portfolio?

State of Economy	Probability of State			Return if State Occurs
	of Economy			Stock A			Stock B			Stock C
Recession		.119		−	10.60%		−	4.00%		−	13.00%
Normal		.675			9.90%			10.76%			17.40%
Boom		.206			21.65%			25.31%			30.01%

rev: 04_25_2019_QC_CS-167128

Multiple Choice

• .00861

• .00904

• .00973

• .00801

• .01162

2)

Given a discount rate of 11%, which of the following cash flow streams has the highest present value?

Multiple Choice

• 12 equal payments of $600 beginning at the end of Year 1.

• 10 equal payments of $600 beginning immediately.

• 12 equal payments of $550 beginning immediately.

Answer 1

1)