1. Assume that annual returns on common stocks are normally distributed with an average historical return of 13.2% and a standard deviation of 20.3%. What is the probability that annual return on common stocks is negative?

a) 0.2578

b) 0.3498

c) 0.4456

d) 0.6502

e) 0.7422

2. Which of the following can be considered as a disadvantage of using a pegged exchange rate?

A. The pegged currency's value may not reflect underlying economic fundamentals

B. It may not be possible to maintain the pegged currency's value over time

C. Both of the above

D. None of the above