1. A stock has returned 18%, -3%, and 0% over the past three years. What is your best guess for what the return will be over the next year?

2. A stock has returned 18%, -3%, and 0% over the past three years. What range of returns are you 95% confident that next year's return will fall in between?

3. The returns of Stock A and Stock B have correlation = 0.4. The variance of Stock A is 0.20 and the variance of Stock B is 0.15. What is the variance of a portfolio that invests $5,000 in Stock A and $15,000 in Stock B?

4. The economy will recover (with probability 0.3), stagnate (with probability 0.5), or enter a depression. A stock will return 35% if the economy recovers, 4% if stagnation, and -40% if depression. What is the expected return of the stock?

5. The economy will recover (with probability 0.3), stagnate (with probability 0.5), or enter a depression. A stock will return 35% if the economy recovers, 4% if stagnation, and -40% if depression. What is the variance of stock returns?

6. The economy will boom or bust. An economic bust will happen with 40% probability. Stock A will return 30% if boom, and -20% if bust. Stock B will return 15% if boom and -5% if bust. What is the variance of a portfolio that invests $30 in Stock A and $90 in Stock B?