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72) You find a certain stock that had returns of 8 percent, −3 percent, 12 percent, and 17 percent
for four of the last five years. The average return of the stock for the past five-year period was 6
percent. What is the standard deviation of the stock's returns for the five-year period?
A) 10.39 percent
B) 4.98 percent
C) 7.16 percent
D) 9.25 percent
E) 5.38 percent
73) A stock had returns of 5 percent, 14 percent, 11 percent, −8 percent, and 6 percent over the
past five years. What is the standard deviation of these returns?
A) 7.74 percent
B) 8.21 percent
C) 9.68 percent
D) 8.44 percent
E) 7.49 percent
74) The common stock of Air Express had annual returns of 11.7 percent, 8.8 percent,
16.7 percent, and −7.9 percent over the last four years, respectively. What is the
standard deviation of these returns?
A) 8.29 percent
B) 9.14 percent
C) 11.54 percent
D) 7.78 percent
E) 10.66 percent
75) A stock had annual returns of 5.3 percent, −2.7 percent, 16.2 percent, and 13.6 percent
over the past four years. Which one of the following best describes the probability that this
stock will produce a return of 20 percent or more in a single year?
A) Less than 2.5 percent but more than .5 percent
B) More than 16 percent
C) Less than .5 percent
D) Less than 1 percent but more than .5 percent
E) Less than 16 percent but more than 2.5 percent
76) A stock has an expected rate of return of 9.8 percent and a standard deviation of 15.4
percent. Which one of the following best describes the probability that this stock will lose at least
half of its value in any one given year?
A) less than 16 percent
B) less than .5 percent
C) less than 1.0 percent
D) less than 2.5 percent
E) less than 5.0 percent
77) A stock had annual returns of 11.3 percent, 9.8 percent, −7.3 percent, and 14.6
percent for the past four years. Based on this information, what is the 95 percent
probability range of returns for any one given year?
A) −2.4 to 17.5 percent
B) −2.60 to 11.80 percent
C) −12.5 to 26.7 percent
D) −10.4 to 12.3 percent
E) −10.9 to 25.1 percent
78) Aimee is the owner of a stock with annual returns of 17.6 percent, −11.7 percent, 5.6
percent, and 9.7 percent for the past four years. She thinks the stock may achieve a return
of 17 percent again this coming year. What is the probability that your friend is correct?
A) Less than .5 percent
B) Greater than .5 percent but less than 1 percent
C) Greater than 1 percent but less than 2.5 percent
D) Greater than 2.5 percent but less than 16 percent
E) Greater than 16 percent
79) A stock had returns of 3 percent, 12 percent, 26 percent, −14 percent, and −1 percent for the
past five years. Based on these returns, what is the approximate probability that this stock will
return at least 20 percent in any one given year?
A) Approximately .1 percent
B) Approximately 5 percent
C) Approximately 2.5 percent
D) Approximately .5 percent
E) Approximately 16 percent
80) A stock had returns of 14 percent, 13 percent, −10 percent, and 7 percent for the
past four years. Which one of the following best describes the probability that this stock
will lose no more than 10 percent in any one year?
A) Greater than .5 but less than 1.0 percent
B) Greater than 1 percent but less than 2.5 percent
C) Greater than 2.5 percent but less than 16 percent
D) Greater than 84 percent but less than 97.5 percent
E) Greater than 95 percent
81) Over the past five years, a stock produced returns of 11 percent, 14 percent, 4
percent, −9 percent, and 5 percent. What is the probability that an investor in this stock
will not lose more than 10 percent in any one given year?
A) Greater than .5 but less than 1.0 percent
B) Greater than 1 percent but less than 2.5 percent
C) Greater than 2.5 percent but less than 16 percent
D) Greater than 84 percent but less than 97.5 percent
E) Greater than 95 percent
82) A stock had annual returns of 6 percent, 13 percent, 11 percent, −8 percent, and 3 percent for
the past five years, respectively. What is the standard deviation of returns for this stock?
A) 10.79 percent
B) 12.60 percent
C) 6.48 percent
D) 14.42 percent
E) 8.28 percent
83) You've observed the following returns on Crash-n-Burn Computer's stock over the
past five years: 8 percent, −5 percent, 16 percent, 12 percent, and 8 percent. What is the
variance of these returns?
A) .07887
B) .00622
C) .01725
D) .01684
E) .00836
84) A stock had annual returns of 5.1 percent, 12.2 percent, −3.8 percent, and 9.4 percent
for the past four years. The arithmetic average of these returns is ________ percent while
the geometric average return for the period is ________ percent.
A) 5.73; 5.06
B) 5.73; 5.55
C) 5.91; 5.74
D) 5.91; 5.62
E) 5.73; 8.92
85) A stock has annual returns of 5 percent, 21 percent, −12 percent, 7 percent, and 6
percent for the past five years. The arithmetic average of these returns is ________
percent while the geometric average return for the period is ________ percent.
A) 5.80; 4.86
B) 5.80; 5.03
C) 5.62; 5.03
D) 5.40; 5.03
E) 5.40; 4.86
86) A stock had returns of 13 percent, 11 percent, 8 percent, 14 percent, −9 percent, and −5
percent over the past six years. What is the geometric average return for this time period?
A) 4.93 percent
B) 4.67 percent
C) 5.13 percent
D) 5.39 percent
E) 5.26 percent
87) Over the past four years a stock had prices of $12.78, $13.34, $16.30, and $15.40,
respectively. The stock pays an annual dividend of $.50 a share. What is the geometric average
return on this stock?
A) 9.87 percent
B) 9.98 percent
C) 9.33 percent
D) 10.91 percent
E) 9.48 percent
88) Over the past 12 years, the common stock of The Flower Shoppe has produced an arithmetic
average return of 12.6 percent and a geometric average return of 12.3 percent. What is the
projected return on this stock for the next five years according to Blume's formula?
A) 11.70 percent
B) 11.89 percent
C) 12.49 percent
D) 12.03 percent
E) 12.12 percent
89) Based on the past 13 years, Westerfield Industrial Supply's common stock has yielded an
arithmetic average rate of return of 12.6 percent. The geometric average return for the same
period was 11.8 percent. What is the estimated return on this stock for the next three years
according to Blume's formula?
A) 11.74 percent
B) 11.92 percent
C) 12.13 percent
D) 11.38 percent
E) 12.47 percent
90) A stock has a geometric average return of 14.6 percent and an arithmetic average return of
15.5 percent based on the last 15 years. What is the estimated average rate of return for the next
six years based on Blume's formula?
A) 14.79 percent
B) 14.96 percent
C) 15.28 percent
D) 15.18 percent
E) 15.42 percent
91) A stock had returns of 12.4 percent, 16.6 percent, 10.2 percent, 19.0 percent, −15.7
percent, and 6.3 percent over the last six years. What is the geometric average return on
the stock for this period?
A) 7.90 percent
B) 7.46 percent
C) 8.56 percent
D) 7.76 percent
E) 8.01 percent
92) Assume the returns from an asset are normally distributed. The average annual return for the
asset is 17.4 percent and the standard deviation of the returns is 27.5 percent. What is the
approximate probability that your money will double in value in a single year?
A) Close to .5 percent
B) Close to 1 percent
C) Less than 2.5 percent but greater than 1 percent
D) Less than 5 percent but greater than 2.5 percent
E) Less than 10 percent but greater than 5 percent
93) Over a 25-year period an asset had an arithmetic return of 13.1 percent and a geometric
return of 12.6 percent. Using Blume's formula, what is your best estimate of the future annual
returns over the next 10 years?
A) 11.18 percent
B) 13.04 percent
C) 11.84 percent
D) 12.91 percent
E) 12.46 percent
