4. A common stock with a coefficient of variation of 0.50 has a (n):

A. Variance equal to half the stock’s expected return

B. Expected return equal to half the stock’s variance

C. Expected return equal to half the stock’s standard deviation

D. Standard deviation equal to half the stock’s expected return

Answer: D

The coefficient of variation is a measure of relative dispersion that indicates how much dispersion exists relative to the mean of the distribution the coefficient of variation is the standard deviation divided by the mean

5. If no other estimator of a given parameter has a sampling distribution with a smaller variance, the estimator used is best characterized as

A. accurate

B. efficient

C. unbiased

D. consistent

Anewser B. An unbiased estimator is efficient if no other unbiased estimator of the same parameter has a sampling distribution with smaller variance

1. A portfolio of no-dividend-paying common stocks earned a geometric mean return of 5 percent between 1 January 1996 and 31 December 2002. The arithmetic mean return for the same period was 6 percent. If the market value of the portfolio at the beginning of 1996 was $100,000, the market value of the portfolio at the end of 2002 was closest to

A . 135,000

B. 140,710

C. 142,000

D. 150,363

Answer: B

There are seven annual periods between I January 1996 and 31 December 2002, the market value of the portfolio

2. Which of the following statements about standard deviation is most accurate? Standard deviation:

A. is the square of the variance.

B. can be a positive number or a negative number.

C. is denominated in the same units as the original data.

D. is the arithmetic mean of the squared deviations from the mean.