1
WEB APPENDIX: A Review of Statistics and the Security Market Line
MULTIPLE CHOICE
Exhibit 1-1A
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
Your expectations from a one year investment in Wang Computers is as follows:
Probability
Rate of Return
.15
-.10
.15
-.20
.35
.00
.25
.15
.10
.15
1. The expected return from this investment is
a.
-0.0752
b.
-0.0040
c.
0.00
d.
0.0075
e.
0.4545
2. 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 the above
2
3. The coefficient of variation of this investment is
a.
−0.06
b.
−0.65
c.
6.60
d.
16.53
e.
165.10