1. Does the Normal distribution of the returns on an asset work well in the volatile time (ie., when the market is uncertain) to access the riskiness of the asset?

a. Yes

b. No

Not related

2. Suppose that your initial investment on INTEL stock was $1000 at period 0, bought some more stock worth of $350 at period 1 and then sold all the stock for $2200 at period 2. What is the dollar-weighted mean return?

a. Less than 20%

b. Higher than 20% but less than 25%

c. Higher than 25% but less than 30%

d. Higher than 30%

3. Suppose a fund manager realized 14% and -2% over last two years. Calculate the geometric mean:

a. Less than 4%

b. Higher than 5% but less than 6%

c. Higher than 6% but less than 7%

d. Higher than 7%

4. Given other parameters known, an effective diversification is determined by the weights on asset and the correlation coefficient between the two asset return series. Diversification is most effective when asset returns are………..

a. High

b. Negatively correlated

c. Positively correlated

d. Uncorrelated