Speculative, or non-investment-grade, bonds have an S&P bond rating of Select on

Question

Speculative, or non-investment-grade, bonds have an S&P bond rating of

Select one:

a. BBB or less.

b. CCC or less.

c. C or less.

d. BB or less.

Stock A has the following returns for various states of the economy:

State of
the Economy Probability Stock A's Return
Recession 10% -30%
Below Average 20% -2%
Average 40% 10%
Above Average 20% 18%
Boom 10% 40%

Stock A's expected return is

Select one:

a. 8.2%.

b. 7.2%.

c. 9.6%

d. 5.4%.

Stock W has the following returns for various states of the economy:

State of the Economy Probability Stock W's Return
Recession 10% -30%
Below Average 20% -2%
Average 40% 10%
Above Average 20% 18%
Boom 10% 40%

Stock W's standard deviation of returns is

Select one:

a. 14%.

b. 20%

c. 17%.

d. 10%.

Explanation / Answer

Ans 1 - d. BB or less.

Ans 2 - a. 8.2%

Ans 3 - c. 17%.

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