1. Which of the following statements are true?

I. In the steps a company takes to prepare for an IPO, the "bake-off" precedes the "road-show".

II. Issue costs for debt are typically larger than issue costs for equity.

III. Shelf registrations and private placements are examples of seasoned security issues.

IV. Bearer bonds make it easier for investors to avoid paying taxes on interest income. (Points : 3.5)

I and II only

II and III only

II, III, and IV only

I, III, and IV only

I, II, III, and IV

2. Suppose a portfolio had an arithmetic average return of 11 percent for a 6-year period. Which one of these statements must be true regarding this portfolio for the period?

A. If the standard deviation of the portfolio is greater than zero, then the geometric average portfolio return is less than 11 percent.

B. At least one of the six years produced an annual rate of return of 11 percent.

C. If the standard deviation of the portfolio is zero, then the geometric average return must also be zero.

D. The standard deviation of the portfolio must be lower than the standard deviation of a comparable portfolio that had an arithmetic average return of 12 percent.