1. On January 1, 2016, you bought 100 shares of stock for $100.00 per share. At the end of 2016, you sold the stock for $98.00 per share. The stock paid a dividend equal to $2.00 per share. What is the 2016 holding period return?

2. Today you go long on 4 December contracts of lean hog futures, at a price of 79.1 cents per pound. One contract is for 40K pounds. One month later, December futures are trading at 79 cents per pound. If you close out your position at this time, what is your profit from this position?

3. In forming a portfolio of two risky assets, what must be true of the correlation coefficient between their returns if there are to be gains from diversification? Explain.