Please use the following data to answer the questions that follow. You may copy over the data to Excel and use spreadsheet functions to perform the required analyses. Calculate the covariance between the Market and Stock A. Be sure to correct for sample.

Year	Market	Stock A	Stock B
1	-0.10	-0.17	0.057
2	0.08	0.20	0.057
3	0.05	0.10	0.057
4	0.15	0.25	0.057
5	0.06	0.07	0.057

Suppose you invest 70 percent of your funds in Stock B and the rest in the market. Calculate the standard deviation of a portfolio of these two assets.

Question options:

1)

0.0232

2)

0.06405

3)

0.02745

4)

0.0000

You have obtained the following data on three stocks. If you wish to invest in only one stock, you should choose Stock _____ . If you wish to buy a stock that would be added to your well-diversified portfolio, you should choose Stock _____.

Stock	Expected Return	Std. Dev.	Beta
A	0.10	0.15	0.79
B	0.10	0.25	0.61
C	0.10	0.20	1.29

Question options:

1)

A; A

2)

A; B

3)

B; A

4)

C; A

5)

C; B