Consider the following probability distribution of returns for Alpha Corporation:

Current Stock Price ($)	Stock Price in One Year ($)	Return R	Probability PR
	$35	40%	25%
$25	$25	0%	50%
	$20	-20%	25%

The expected return for Alpha Corporation is closest to:

A) 6.67%

B) 5.00%

C) 10%

D) 0.00%

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Which of the following statements is FALSE?

A stock's return is perfectly positively correlated with itself.

When the covariance equals 0, the stocks have no tendency to move either together or in opposition to one another.

The closer the correlation is to -1, the more the returns tend to move in opposite directions.

The variance of a portfolio depends only on the variance of the individual stocks.

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Which of the following statements is FALSE?

The covariance and correlation allow us to measure the co-movement of returns.

Correlation is the expected product of the deviations of two returns from their means.

Because the prices of the stocks do not move identically, some of the risk is averaged out in a portfolio.

Portfolio weights add up to 1 so that they represent the way we have divided our money between the different individual investments in the portfolio.