32410_1_Asset-Management-MCQ by nuhman10

VIEWS: 177 PAGES: 37

									                                   ASSET ALLOCATION
1 In an investment policy statement the objectives of an investor are expressed in terms of

                a)      risk and return
                b)      risk
                c)      return
                d)      time horizon
                e)      liquidity needs

2    Which of the following is not a step in the portfolio management process?
               a)      Develop a policy statement.
               b)      Study current financial and economic conditions.
               c)      Construct the portfolio.
               d)      Monitor investor's needs and market conditions.
               e)      Sell all assets and reinvestment proceeds at least once a year.

3    The first step in the investment process is the development of a(n)
                 a)      Objective statement.
                 b)      Policy statement.
                 c)      Financial statement.
                 d)      Statement of cash needs.
                 e)      Statement of cash flows.
4    Which of the following is not considered to be an investment objective?
               a)      Capital preservation
               b)      Capital appreciation
               c)      Current income
               d)      Total return
               e)      None of the above (that is, all are considered investment objectives)

(5                       must be stated in terms of expected returns and risk. An investor's
                tolerance for risk must be established before returns objectives can be stated.
                a)      Investment requirements
                b)      Investment constraints
                c)      Investment rewards
                d)      Investment objectives
                e)      Investment policy

6    _______________ is an appropriate objective for investors who want their portfolio to grow
              in real terms, i.e., exceed the rate of inflation.
              a)       Capital preservation
              b)       Capital appreciation
              c)       Portfolio growth
              d)       Value additivity
              e)       Nominal preservation

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7   ___________ refer(s) to the ability to convert assets to cash quickly and at a fair market price
             and often increase(s) as one approaches the later stages of the investment life
             cycle.
             a)      Liquidity needs
             b)      Time horizons
             c)      Liquidation values
             d)      Liquidation essentials
             e)      Capital liquidations

8   The policy statement may include a __________ against which a portfolio's or portfolio
              manager's performance can be measured.
              a)     Milestone
              b)     Benchmark
              c)     Landmark
              d)     Reference point
              e)     Market pair

9   Asset allocation is
               a)       The process of dividing funds into asset classes.
               b)       Concerned with returns variability.
               c)       Concerned with the risk associated with different assets.
               d)       Concerned with the relationship among investments’ returns.
               e)       All of the above.

10 The asset allocation decision must involve a consideration of
              a)      Cultural differences.
              b)      The objectives stated in the investor's policy statement.
              c)      The types of assets that are appropriate for the investor.
              d)      The risk associated with different investments.
              e)      All of the above.

11 Once the portfolio is constructed, it must be continuously
             a)       Rebalanced.
             b)       Recycled
             c)       Reinvested
             d)       Monitored.
             e)       Manipulated.




                                                 2
           SELECTING INVESTMENTS IN A GLOBAL MARKET

                             MULTIPLE CHOICE QUESTIONS

1   An investor who purchases a put option:
              a)     Has the right to buy a given stock at a specified price during a designated
                     time period.
              b)     Has the right to sell a given stock at a specified price during a designated
                     time period.
              c)     Has the obligation to buy a given stock at a specified price during a
                     designated time period.
              d)     Has the obligation to sell a given stock at a specified price during a
                     designated time period.
              e)     None of the above.

2   All of the following are considered fixed income investments except
                a)     Corporate bonds.
                b)     Preferred stock.
                c)     Treasury bills, notes, and bonds.
                d)     Money market mutual funds.
                e)     Certificates of deposit (CDs).

3   Capital market instruments include all of the following except
              a)       U.S. Treasury notes and bonds.
              b)       U.S Treasury bills.
              c)       U.S. government agency securities.
              d)       Municipal bonds.
              e)       Corporate bonds.

4   All of the following are considered fixed income securities except
                a)     Debentures.
                b)     Eurobonds.
                c)     Preferred stock.
                d)     Mutual funds.
                e)     Yankee bonds.

5 The purchase and sale of commodities for current delivery and consumption is known as
dealing in the _________ market.
                a)    Futures
                b)    Spot
                c)    Money
                d)    Capital
                e)    Options


                                                3
6   An investor who purchases a call option:
              a)     Has the right to buy a given stock at a specified price during a designated
                     time period.
              b)     Has the right to sell a given stock at a specified price during a designated
                     time period.
              c)     Has the obligation to buy a given stock at a specified price during a
                     designated time period.
              d)     Has the obligation to sell a given stock at a specified price during a
                     designated time period.
              e)     None of the above.

7   If this year is consistent with historical trends you would expect the return for small
                      capitalization stocks to be
               a)     Below common stocks and above long-term government bonds.
               b)     Below common stocks and below long-term government bonds.
               c)     Above last year’s return on the same stocks.
               d)     Above common stock, long-term government, and corporate bonds.
               e)     The least variable among long-term bonds and common stocks.

8   The correlation between U.S. equities and U.S. government bonds is
               a)      Strongly positive.
               b)      Weakly Positive.
               c)      Strongly Negative.
               d)      Weakly Negative.
               e)      Indeterminate.

9   The best way to directly acquire the shares of a foreign company is through
              a)      International mutual funds.
              b)      Global mutual funds.
              c)      American Depository Receipts.
              d)      Investment in U.S. companies operating internationally.
              e)      Eurobonds.

10 An agreement that provides for the future delivery or receipt of an asset at a specified date for
                    a specified price is a
            a)      Eurobonds contract.
            b)      Futures contract.
            c)      Put option contract.
            d)      Call option contract.
            e)      Warrant contract.


11 Antiques, art, coins, stamps, jewelry, etc., are not included in the investment portfolios of
financial institutions because
                 a)     Prices vary substantially.

                                                 4
               b)     Transaction costs are relatively high.
               c)     They are illiquid.
               d)     None of the above.
               e)     All of the above.

12 Rank the following four investments in increasing order of historical risk.
              a)     Art, T-bills, corporate bonds, and common stock
              b)     T-bills, common stock, corporate bonds, art
              c)     Corporate bonds, T-bills, common stock, art
              d)     Common stock, corporate bonds, T-bills, art
              e)     T-bills, corporate bonds, common stock, art

13 A statistic that that measures how two variables tend to move together is the
                a)      Coefficient of variation
                b)      Correlation coefficient
                c)      Standard deviation
                d)      Mean
                e)      Variance

14 Which of the following statements concerning historical investment risk and return is
false?
          a)     The geometric mean of the rates of return was always lower than the
                 arithmetic mean of the rates of return.
          b)     The rates of return on long-term U.S. government bonds were lower than
                 on stocks.
          c)     Real estate investments consistently provide higher rates of return than
                 those provided by common stock.
          d)     Stocks and bonds experienced results in the middle of the art and antiques
                 series.
          e).    none of the above (that is, all are true statements)

(15 Which of the following are reasons that U.S. investors should consider foreign markets when
constructing global portfolios.
               a)     Ignoring foreign markets reduced their choices of investment
                      opportunities.
               b)     Foreign markets have low correlations with U.S. markets.
               c)     Returns on non-U.S. stocks can substantially exceed returns for U.S
                      securities.
               d)     All of the above.
               e)     None of the above.


16             For a U.S. based investor, a weaker dollar means that overall dollar based returns
on overseas security investment will be higher because
               a) A weaker dollar means that exports will rise.

                                                5
                b)   A weaker dollar means that more foreign investors will by U.S. securities.
                c)   A weaker dollar means that the foreign currency will convert to more dollars.
                d)   A weaker dollar means that more investors will purchase the foreign security.
                e)   None of the above.

17              In order to diversify risk an investor must have investments that have correlations
                with other investments in the portfolio that are
                a)    low positive
                b)    zero
                c)    negative
                d)    any of the above
                e)    none of the above

18              Convertible bonds are bonds
                a)    That are convertible into more bonds.
                b)    That are convertible from unsecured to secured status.
                c)    That are convertible into company stock.
                d)    That are convertible into specific assets.
                e)    That have an option attached.


        USE THE FOLLOWING INFORMATION FOR THE NEXT FOUR PROBLEMS

   Security                        Annual Percentage Return
U.S. government T-bills                                    3.04
Long-term government bonds                                 5.75
Long-term corporate bonds                                  6.80
Large capitalization common stocks                        13.50
Small capitalization common stocks                        15.60

        The annual rate of inflation is 2%.

1    What is the real return on long-term corporate bonds?
                a)       1.02%
                b)       3.68%
                c)       4.71%
                d)       11.27%
                e)       13.33%

2    What is the real return on T-bills?
                a)       1.02%
                b)       3.68%
                c)       4.71%
                d)       11.27%
                e)       13.33%

                                                 6
3   What is the real return on small capitalization stocks?
               a)       1.02%
               b)       3.68%
               c)       4.71%
               d)       11.27%
               e)       13.33%

4   What is the real return on large capitalization stocks?
               a)       1.02%
               b)       3.68%
               c)       4.71%
               d)       11.27%
               e)       13.33%

       USE THE FOLLOWING INFORMATION FOR THE NEXT FOUR PROBLEMS

                                           Real Returns

INVESTMENT                 REAL ANNUAL RETURN
Large company stock                 6.50%
Small capitalization stock          8.60%
Long-term corporate bonds           3.60%
Long-term government bonds          2.80%
U.S. Treasury bills                 1.03%

       The annual rate of inflation is 2.5%

5   What is the large company stock nominal return?
               a)       3.56%
               b)       5.37%
               c)       6.19%
               d)       9.16%
               e)       11.32%

6   What is the T-bill nominal return
               a)      3.56%
               b)      5.37%
               c)      6.19%
               d)      9.16%
               e)      11.32%

7   What is the long term Treasury bond nominal return?
               a)      3.56%
               b)      5.37%

                                                 7
                c)     6.19%
                d)     9.16%
                e)     11.32%

8    What is the small capitalization stock nominal return?
                a)      3.56%
                b)      5.37%
                c)      6.19%
                d)      9.16%
                e)      11.32%

9               A return series has an arithmetic mean of 12.8% and standard deviation of 7.8%.
                Assuming the returns are normally distributed what is the range of returns that an
                investor would expect to receive 95% of the time?

                a)     12.8% to 20.6%
                b)     -10.6% to 36.2%
                c)     -2.8% to 28.4%
                d)     -12.8% to 20.6%
                e)     10.6% to 36.2%

10              A return series has an arithmetic mean of 12.8% and standard deviation of 7.8%.
                Assuming the returns are normally distributed what is the range of returns that an
                investor would expect to receive 99% of the time?

                a)     12.8% to 20.6%
                b)     -10.6% to 36.2%
                c)     -2.8% to 28.4%
                d)     -12.8% to 20.6%
                e)     10.6% to 36.2%


11              A return series has an arithmetic mean of 10.5% and standard deviation of 13%.
                Assuming the returns are normally distributed what is the range of returns that an
                investor would expect to receive 99% of the time?

                a)     10.5% to 13%
                b)     -2.5% to 23.5%
                c)     -28.5% to 49.5%
                d)     -15.5% to 36.5%
                e)     0% to 36.5%

12              A return series has an arithmetic mean of 10.5% and standard deviation of 13%.
                Assuming the returns are normally distributed what is the range of returns that an
                investor would expect to receive 95% of the time?


                                                 8
               a)      10.5% to 13%
               b)      -2.5% to 23.5%
               c)      -28.5 to 49.5%
               d)      -15.5% to 36.5%
               e)      0% to 10.5%


        USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS

       Given the following annual returns for both Alpine Corporation and Tauber Industries:

                      Alpine's                        Tauber's
                      Year          Rate of Return               Rate of Return
                      1995                               5       9
                      1996                               9       16
                      1997                              11       -16
                      1998                             -10       12
                      1999                              12       9

1A Calculate the covariance.
              a)    -32.20
              b)    -23.32
              c)      1.00
              d)     23.32
              e)     32.20

2A Calculate the coefficient of correlation.
              a)      -0.456
              b)      -0.354
              c)       0.000
              d)       0.456
              e)       3.538




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                    SECURITY MARKET INDICATOR SERIES

                           MULTIPLE CHOICE QUESTIONS

1      Which of the following is not a use of security market indicator series?
             a)      To use as a benchmark of individual portfolio performance
             b)      To develop an index portfolio
       c)    To determine factors influencing aggregate security price movements
             d)      To use in the measurement of systematic risk
             e)      To use in the measurement of diversifiable risk

2   A properly selected sample for use in constructing a market indicator series will consider the
              sample's source, size and
              a)      Breadth.
              b)      Average beta.
              c)      Value.
              d)      Variability.
              e)      Dividend record.

3   In a price weighted average stock market indicator series, the following type of stock has the
                greatest influence
                a)      The stock with the highest price
                b)      The stock with the lowest price
                c)      The stock with the highest market capitalization
                d)      The stock with the lowest market capitalization
                e)      The stock with the highest P/E ratio

4   What effect does a stock substitution or stock split have on a price-weighted series?
                      a)      Index remains the same, divisor will
     increase/decrease.
                      b)      Divisor remains the same, index will
     increase/decrease.
                      c)      Index and divisor will both remain the same.
                      d)      Index and divisor will both reflect the
     changes (immediately).
                      e)      Not enough information is provided.
5 Which of the following is not a value-weighted series?
              a)    NASDAQ Industrial Index

                                               10
                      b)   Dow Jones Industrial Average
               c)     Wilshire 5000 Equity Index
               d)     American Stock Exchange Series
               e)     NASDAQ Composite Index

6   An example of a value weighted stock market indicator series is the
             a)      Dow Jones Industrial Average.
             b)      Nikkei Dow Jones Average.
             c)      S&P 500 Index.
             d)      Value Line Index.
             e)      Lehman Hutton Index.

7   In a value weighted index
               a)     Exchange rate fluctuations have a large impact.
               b)     Exchange rate fluctuations have a small impact.
               c)     Large companies have a disproportionate influence on the index.
               d)     Small companies have an exaggerated effect on the index.
               e)     None of the above

8   Of the following indices, which includes the most comprehensive list of stocks?
                a)     New York Exchange Index
                b)     Standard and Poor’s Index
                c)     American Stock Exchange Index
                d)     NASDAQ Series Index
                e)     Wilshire Equity Index

(9 The Value Line Composite Average is calculated using the _______ of percentage price
             changes.
             a)     arithmetic average
             b)     harmonic average
             c)     expected value
             d)     geometric average
             e)     logarithmic average

10 Which of the following is not a global equity indicator
series?
               a)    Morgan Stanley Capital International Indexes
               b)    Dow Jones World Stock Index
               c)    FT/S & P-Actuaries World Indexes
               d)    Merrill Lynch-Wilshire World Indexes
          e)   None of the above (that is, each is a global
   equity indicator series)

11 Studies of correlations among monthly equity price index returns have found:
              a)       Low correlations between various U.S. equity indexes
              b)       High correlations between various U.S. equity
                       indexes

                                               11
               c)     High correlations between U.S. and non-U.S. equity
                      indexes
               d)     Negative correlations between various U.S. equity
                      indexes
               e)     None of the above




    USE THE FOLLOWING INFORMATION FOR THE NEXT THREE PROBLEMS
                    Number of shares                    Closing
Prices (per share)
               Companies         outstanding                Day T               Day T + 1
                   1               2,000                  $30.00                $25.00
                   2               7,000                   55.00                 60.00
                   3               5,000                   20.00                 25.00
                   4               4,000                   40.00                 45.00

1 Assume that a stock price-weighted indicator consisted of the
         four issues with their prices. What are the values of
         the stock indicator for Day T and T + 1 and what is the
         percentage change?
         a)   36.25, 38.75, 6.9%
         b)   38.75, 36.25, -6.9%
         c)   100, 106.9, 6.9%
         d)   107.48, 106.33, 1.15%
         e)   None of the above

2   For a value-weighted series, assume that Day T is the base period and the base value is 100.
               What is the new index value for Day T + 1 and what is the percentage change in
               the index from Day T?
               a)      106.33, 6.33%
               b)      107.48, 7.48%
               c)      109.93, 9.93%
               d)      108.7, 8.7%
               e)      None of the above

3   Compute an unweighted price indicator series, using geometric means. What is the
             percentage change in the index from Day T to Day T+1. Assume a base index
             value of 100 on Day T.
             a)     5.35%
             b)     7.48%
             c)     9.93%
             d)     6.33%
             e)     None of the above

                                              12
     USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS

             Year           % Price Change for GB Industries
             2000                    10.0%
             2001                    12.0%
             2002                    10.0%
             2003                    11.0%
             2004                     6.0%

4    Calculate the average annual rate of change for GB Industries for the 5 year period using
            the arithmetic mean.
            a)       0.098%
            b)       9.80%
            c)       8.50%
            d)       8.00%
            e)      89.00%

5    Calculate the average annual rate of change for GB Industries for the 5 year period using
            the geometric mean.
            a)      9.7800%
            b)      0.0978%
            c)      9.0700%
            d)      0.0970%
            e)      3.6400%

     USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS

            Year            % Price Change for Stock Index
            2000                     8.0%
            2001                    10.0%
            2002                   -14.0%
            2003                    20.0%
            2004                   -10.0%

(6   Calculate the average annual rate of change for this index for the 5 year period using the
            arithmetic mean.
            a)      0.28%
            b)      1.28%
            c)      2.80%
            d)      3.58%
            e)      6.38%




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7   Calculate the average annual rate of change for this index for the 5 year period using the
           geometric mean.
           a)      0.09%
           b)      1.99%
           c)      3.99%
           d)      4.50%
           e)      4.67%

                MULTIFACTOR MODELS OF RISK AND RETURN

                        MULTIPLE CHOICE QUESTIONS

1   Consider the following two factor APT model

           E(R) = λ0 + λ1b1 + λ2b2

           a)      λ1 is the expected return on the asset with zero
                   systematic risk.
           b)      λ1 is the expected return on asset 1.
           c)      λ1 is the pricing relationship between the risk
                   premium and the asset.
           d)      λ1 is the risk premium.
           e)      λ1 is the factor loading.


2   In the APT model the idea of riskless arbitrage is to

assemble a portfolio that

           a)      requires some initial wealth, will bear no risk,
                   and still earn a profit.
           b)      requires no initial wealth, will bear no risk, and
                   still earn a profit.
           c)      requires   no  initial   wealth,   will   bear  no
                   systematic risk, and still earn a profit.
           d)      requires   no  initial   wealth,   will   bear  no
                   unsystematic risk, and still earn a profit.
           e)      requires some initial wealth, will bear no
                   systematic risk, and still earn a profit.


3   The equation for the single-index market model is

           a)      RFRit = ai + bRmt + et
           b)      Rit = ai + bRmt + et
           c)      Rit = ai + bRFRt + et

                                            14
    d)     Rmt = ai + bRit + et
    e)     Rit = ai + b(Rmt – RFRt)+ et


4        The excess return form of the single-index market

    model is

    a)      Rit = α + b(Rmt – Rit) + eit
    b)      RFRt = α + b(Rmt – RFRt) + eit
    c)      Rit – RFRt = α + b(Rmt) + eit
    d)      Rit = α + b(Rmt – RFRt) + eit
    e)      Rit – RFRt = α + b(Rmt – RFRt) + eit


5        Consider the following list of risk factors:




           1. monthly growth in industrial production
           2. return on high book to market value portfolio
              minus return on low book to market value
              portfolio
           3. change in inflation
           4. excess return on stock market portfolio
           5. return on small cap portfolio minus return on
              big cap portfolio
           6. unanticipated change in bond credit spread


    Which of the following factors would you use to develop

    a macroeconomic-based risk factor model

    a)     1.,   2. , and 3.
    b)     1.,   3. and 5.
    c)     2.,   4., and 5.
    d)     1.,   3., and 6.
    e)     4.,   5., and 6.


6   Consider the following list of risk factors:




                               15
                      1. monthly growth in industrial production
                      2. return on high book to market value portfolio
                         minus return on low book to market value
                         portfolio
                      3. change in inflation
                      4. excess return on stock market portfolio
                      5. return on small cap portfolio minus return on
                         big cap portfolio
                      6. unanticipated change in bond credit spread


               Which of the following factors would you use to develop

               a microeconomic-based risk factor model

               a)   1.,   2. , and 3.
               b)   1.,   3. and 5.
               c)   2.,   4., and 5.
               d)   1.,   3., and 6.
               e)   4.,   5., and 6.




                            MULTIPLE CHOICE PROBLEMS

1   Under the following conditions, what are the expected returns for stock X and Y?
                0 = 0.04                   bx,1 = 1.2
                k1 = 0.035                  bx,2 = 0.75
                k2 = 0.045                  by,1 = 0.65
                                            by,2 = 1.45
               a)     11.58% and 12.8%
               b)     15.65% and 18.23%
               c)     13.27% and 15.6%
               d)     18.2% and 16.45%
               e)     None of the above

2      Under the following conditions, what are the expected returns for stock Y and Z?
              0 = 0.05                    by,1 = 0.75
              k1 = 0.06                    by,2 = 1.35
              k2 = 0.05                    bz,1 = 1.5
                                           bz,2 = 0.85
               a)     17.61% and 13.23%
               b)     16.25% and 18.25%
               c)     13.24% and 28.46%
               d)     14.83% and 17.69%

                                              16
           e)      None of the above

3   Under the following conditions, what are the expected returns for stock A and B?
           0 = 0.035                   ba,1 = 1.00
           k1 = 0.05                    ba,2 = 1.40
           k2 = 0.06                    bb,1 = 1.70
                                        bb,2 = 0.65
    a)     14.8% and 13.8%
           b)    19.8% and 29.5%
           c)    16.0% and 19.8%
           d)    16.9% and 15.9%
           e)    None of the above

4          Under the following conditions, what are the expected returns for stock X and Y?
           0 = 0.05                    bx,1 = 0.90
           k1 = 0.03                    bx,2 = 1.60
           k2 = 0.04                    by,1 = 1.50
                                        by,2 = 0.85
           a)      14.1% and 12.9%
           b)      12.5% and 19.5%
           c)      19.5% and 18.5%
           d)      21.2% and 18.5%
           e)      None of the above

5   Under the following conditions, what are the expected returns for stock A and C?
           0 = 0.07                    ba,1 = 0.95
           k1 = 0.04                    ba,2 = 1.10
           k2 = 0.03                    bc,1 = 1.10
                                        bc,2 = 2.35
          a)       14.1% and 17.65%
          b)       14.1% and 18.45%
          c)       17.65% and 18.45%
          d)       18.45% and 17.52%
          e)       None of the above
6   Consider a two-factor APT model where the first factor is changes in the 30-year T-bond
          rate, and the second factor is the percent growth in GNP. Based on
          historical estimates you determine that the risk premium for the interest rate factor
          is 0.02, and the risk premium on the GNP factor is 0.03. For a particular asset, the
          response coefficient for the interest rate factor is –1.2, and the response coefficient
          for the GNP factor is 0.80. The rate of return on the zero-beta asset is 0.03.
          Calculate the expected return for the asset.
          a)     5.0%
          b)     2.4%
          c)     -3.0%

                                             17
               d)    -2.4%
               e)    3.0%




                       PORTFOLIO MANAGEMENT

                     MULTIPLE CHOICE CONCEPT QUESTIONS
1   When individuals evaluate their portfolios they should evaluate
              a)     All the U.S. and non-U.S. stocks.
              b)     All marketable securities.
              c)     All marketable securities and other liquid assets.
              d)     All assets.
              e)     All assets and liabilities.

2   The probability of an adverse outcome is a definition of
              a)       Statistics.
              b)       Variance.
              c)       Random.
              d)       Risk.
              e)       Semi-variance above the mean.

3   The Markowitz model is based on several assumptions regarding investor behavior. Which
             of the following is not such any assumption?
             a)      Investors consider each investment alternative as being represented by a
                     probability distribution of expected returns over some holding period.
             b)      Investors maximize one-period expected utility.
             c)      Investors estimate the risk of the portfolio on the basis of the variability of
                     expected returns.
             d)      Investors base decisions solely on expected return and risk.
             e)      None of the above (that is, all are assumptions of the Markowitz model)

4   Markowitz believes that any asset or portfolio of assets can be described by ________
             parameter(s).
             a)     One
             b)     Two
             c)     Three
             d)     Four
             e)     Five

5   Semivariance, when applied to portfolio theory, is concerned with
              a)     The square root of deviations from the mean.
              b)     All deviations below the mean.
              c)     All deviations above the mean.
                                                18
                d)     All deviations.
                e)     The summation of the squared deviations from the mean.

6    The purpose of calculating the covariance between two stocks is to provide a(n) ________
               measure of their movement together.
               a)     Absolute
               b)     Relative
               c)     Indexed
               d)     Loglinear
               e)     Squared

7    In a two stock portfolio, if the correlation coefficient between two stocks were to decrease
                over time every thing else remaining constant the portfolio's risk would
                a)      Decrease.
                b)      Remain constant.
                c)      Increase.
                d)      Fluctuate positively and negatively.
                e)      Be a negative value.

8    Which of the following statements about the correlation coefficient is false?
               a)      The values range between -1 to +1.
               b)      A value of +1 implies that the returns for the two stocks move together in
                       a completely linear manner.
               c)      A value of -1 implies that the returns move in a completely opposite
                       direction.
               d)      A value of zero means that the returns are independent.
               e)      None of the above (that is, all statements are true)

10 Given a portfolio of stocks, the envelope curve containing the set of best possible
            combinations is known as the
            a)      Efficient portfolio.
            b)      Utility curve.
            c)      Efficient frontier.
            d)      Last frontier.
            e)      Capital asset pricing model.

11 A portfolio is considered to be efficient if:
              a)      No other portfolio offers higher expected returns with the same risk.
              b)      No other portfolio offers lower risk with the same expected return.
              c)      There is no portfolio with a higher return.
              d)      Choices a and b
              e)      All of the above

12              The optimal portfolio is identified at the point of tangency between the efficient
                frontier and the

                                                19
               a)     highest possible utility curve.
               b)     lowest possible utility curve.
               c)     middle range utility curve.
               d)     steepest utility curve.
               e)     flattest utility curve.

13             An individual investor’s utility curves specify the tradeoffs he or she is willing to
               make between
               a)     high risk and low risk assets.
               b)     high return and low return assets.
               c)     covariance and correlation.
               d)     return and risk.
               e)     efficient portfolios.

14             A portfolio manager is considering adding another security to his portfolio. The
               correlations of the 5 alternatives available are listed below. Which security would
               enable the highest level of risk diversification
               a)      0.0
               b)      0.25
               c)      -0.25
               d)      -0.75
               e)      1.0

15             A positive covariance between two variables indicates that
               a)     the two variables move in different directions.
               b)     the two variables move in the same direction.
               c)     the two variables are low risk.
               d)     the two variables are high risk.
               e)     the two variables are risk free.


                            MULTIPLE CHOICE PROBLEMS

1    Between 1990 and 2000, the standard deviation of the returns for the NIKKEI and the DJIA
              indexes were 0.18 and 0.16, respectively, and the covariance of these index
              returns was 0.003. What was the correlation coefficient between the two market
              indicators?
              a)      9.6
              b)      0.0187
              c)      0.1042
              d)      0.0166
              e)      0.343

2    Between 1994 and 2004, the standard deviation of the returns for the S&P 500 and the NYSE
               indexes were 0.27 and 0.14, respectively, and the covariance of these index

                                                20
              returns was 0.03. What was the correlation coefficient between the two market
              indicators?
              a)      1.26
              b)      0.7937
              c)      0.2142
              d)      0.1111
              e)      0.44

3   Between 1980 and 1990, the standard deviation of the returns for the NIKKEI and the DJIA
             indexes were 0.19 and 0.06, respectively, and the covariance of these index
             returns was 0.0014. What was the correlation coefficient between the two market
             indicators?
             a)      8.1428
             b)      0.0233
             c)      0.0073
             d)      0.2514
             e)      0.1228

4   Between 1975 and 1985, the standard deviation of the returns for the NYSE and the S&P 500
              indexes were 0.06 and 0.07, respectively, and the covariance of these index
              returns was 0.0008. What was the correlation coefficient between the two market
              indicators?
              a)      .1525
              b)      .1388
              c)      .1458
              d)      .1905
              e)      .1064

5   Between 1986 and 1996, the standard deviation of the returns for the NYSE and the DJIA
             indexes were 0.10 and 0.09, respectively, and the covariance of these index
             returns was 0.0009. What was the correlation coefficient between the two market
             indicators?
             a)      .1000
             b)      .1100
             c)      .1258
             d)      .1322
             e)      .1164

6   Between 1980 and 2000, the standard deviation of the returns for the NIKKEI and the DJIA
             indexes were 0.08 and 0.10, respectively, and the covariance of these index
             returns was 0.0007. What was the correlation coefficient between the two market
             indicators?
             a)      .0906
             b)      .0985
             c)      .0796

                                             21
               d)     .0875
               e)     .0654




7   What is the expected return of the three stock portfolio described below?
               Common Stock                Market Value         Expected Return
                  Ando Inc.                    95,000                 12.0%
                  Bee Co.                      32,000                 8.75%
                  Cool Inc.                    65,000                 17.7%
               a)     18.45%
               b)     12.82%
               c)     13.38%
               d)     15.27%
               e)     16.67%

8   What is the expected return of the three stock portfolio described below?
               Common Stock                Market Value          Expected Return
                   Xerox                      125,000                   8%
                   Yelcon                     250,000                  25%
                   Zwiebal                    175,000                  16%
               a)     18.27%
               b)     14.33%
               c)     16.33%
               d)     12.72%
               e)     16.45%

9   What is the expected return of the three stock portfolio described below?
               Common Stock                Market Value          Expected Return
                    Alko Inc.                  25,000                  38%
                    Belmont Co.               100,000                  10%
                    Cardo Inc.                 75,000                  16%
               a)     21.33%
               b)     12.50%
               c)     32.00%
               d)     15.75%
               e)     16.80%

10 What is the expected return of the three stock portfolio described below?
              Common Stock                Market Value          Expected Return
                   Delton Inc.                50,000                  10%
                   Efley Co.                  40,000                  11%
                   Grippon Inc.               60,000                  16%
              a)     14.89%

                                               22
               b)     16.22%
               c)     12.66%
               d)     13.85%
               e)     16.99%

11 What is the expected return of the three stock portfolio described below?
              Common Stock                Market Value           Expected Return
                Lupko Inc.                    50,000                  13%
                 Mackey Co.                   25,000                   9%
                 Nippon Inc.                  75,000                  14%
              a)     12.04%
              b)     12.83%
              c)     13.07%
              d)     15.89%
              e)     17.91%


       USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS
               Asset (A)                         Asset (B)
              E(RA) = 10%                       E(RB) = 15%
               (A) = 8%                        (B) = 9.5%
               WA = 0.25                         WB = 0.75
                             CovA,B = 0.006

12 What is the expected return of a portfolio of two risky assets if the expected return E(Ri),
             standard deviation (i), covariance (COVi,j), and asset weight (Wi) are as shown
             above?
             a)      8.79%
             b)      12.5%
             c)      13.75%
             d)      7.72%
             e)      12%

13 What is the standard deviation of this portfolio?
              a)     8.79%
              b)     13.75%
              c)     12.5%
              d)     7.72%
              e)     5.64%

       USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS

                Asset (A)                         Asset (B)
              E(RA) = 25%                       E(RB) = 15%
               (A) = 18%                        (B) = 11%

                                               23
               WA = 0.75                         WB = 0.25
                              COVA,B = -0.0009

14 What is the expected return of a portfolio of two risky assets if the expected return E(Ri),
             standard deviation (i), covariance (COVi,j), and asset weight (Wi) are as shown
             above?
             a)      18.64%
             b)      20.0%
             c)      22.5%
             d)      13.65%
             e)      11%

15 What is the standard deviation of this portfolio?
              a)     5.45%
              b)     18.64%
              c)     20.0%
              d)     22.5%
              e)     13.65%

       USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS
               Asset (A)                          Asset (B)
              E(RA) = 9%                        E(RB) = 11%
               (A) = 4%                         (B) = 6%
                WA = 0.4                          WB = 0.6
                            COVA,B = 0.0011
16 What is the expected return of a portfolio of two risky assets if the expected return E(Ri),
             standard deviation (i), covariance (COVi,j), and asset weight (Wi) are as shown
             above?
             a)      8.95%
             b)      9.30%
             c)      9.95%
             d)     10.20%
             e)     10.70%

17 What is the standard deviation of this portfolio?
              a)     3.68%
              b)     4.56%
              c)     4.99%
              d)     5.16%
              e)     6.02%

       USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS
             Asset (A)             Asset (B)
            E(RA) = 10%           E(RB) = 8%

                                               24
               (A) = 6%                         (B) = 5%
                WA = 0.3                         WB = 0.7
                            COVA,B = 0.0008

18 What is the expected return of a portfolio of two risky assets if the expected return E(Ri),
              standard deviation (i), covariance (COVi,j), and asset weight (Wi) are as shown
              above?
              a)       8.6%
              b)       8.1%
              c)       9.3%
              d)     10.2%
              e)     11.6%
19 What is the standard deviation of this portfolio?
              a)      5.02%
              b)      3.88%
              c)      6.21%
              d)      4.04%
              e)      4.34%

       USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS
             Asset (A)                   Asset (B)
            E(RA) = 8%                 E(RB) = 15%
             (A) = 7%                  (B) = 10%
              WA = 0.4                   WB = 0.6
                       COVA,B = 0.0006

20 What is the expected return of a portfolio of two risky assets if the expected return E(Ri),
             standard deviation (i), covariance (COVi,j), and asset weight (Wi) are as shown
             above?
             a)      8.0%
             b)      12.2%
             c)      7.4%
             d)      9.1%
             e)     11.6%

21 What is the standard deviation of this portfolio?
              a)     3.89%
              b)     4.61%
              c)     5.02%
              d)     6.83%
              e)     6.09%

       USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS
               Asset (A)                         Asset (B)
              E(RA) = 16%                       E(RB) = 10%

                                               25
               (A) = 9%                         (B) = 7%
                WA = 0.5                          WB = 0.5
                            COVA,B = 0.0009

22 What is the expected return of a portfolio of two risky assets if the expected return E(Ri),
             standard deviation (i), covariance (COVi,j), and asset weight (Wi) are as shown
             above?
             a)     10.6 %
             b)     10.2%
             c)     13.0%
             d)     11.9%
             e)     14.0%

23 What is the standard deviation of this portfolio?
              a)     6.08%
              b)     5.89%
              c)     7.06%
              d)     6.54%
              e)     7.26%

       USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS
               Asset (A)                         Asset (B)
              E(RA) = 7%                        E(RB) = 9%
               (A) = 6%                         (B) = 5%
                WA = 0.6                          WB = 0.4
                            COVA,B = 0.0014
24 What is the expected return of a portfolio of two risky assets if the expected return E(Ri),
             standard deviation (i), covariance (COVi,j), and asset weight (Wi) are as shown
             above?
             a)     5.8%
             b)     6.1%
             c)     6.9%
             d)     7.8%
             e)     8.9%

25 What is the standard deviation of this portfolio?
              a)     4.87%
              b)     3.62%
              c)     4.13%
              d)     5.76%
              e)     6.02%

       USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS
               Asset (A)                          Asset (B)

                                               26
              E(RA) = 10%                       E(RB) = 14%
               (A) = 7%                         (B) = 8%
                WA = 0.7                          WB = 0.3
                            COVA,B = 0.0013
26 What is the expected return of a portfolio of two risky assets if the expected return E(Ri),
              standard deviation (i), covariance (COVi,j), and asset weight (Wi) are as shown
              above?
              a)       6.4%
              b)       9.1%
              c)     10.2%
              d)     10.8%
              e)     11.2%
27 What is the standard deviation of this portfolio?
              a)     4.51%
              b)     5.94%
              c)     6.75%
              d)     7.09%
              e)     8.62%

USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS
               Asset (A)                         Asset (B)
              E(RA) = 18%                       E(RB) = 13%
               (A) = 7%                         (B) = 6%
                WA = 0.3                          WB = 0.7
                            COVA,B = 0.0011
28 What is the expected return of a portfolio of two risky assets if the expected return E(Ri),
             standard deviation (i), covariance (COVi,j), and asset weight (Wi) are as shown
             above?
             a)     10.10%
             b)     11.60%
             c)     13.88%
             d)     14.50%
             e)     15.37%

29 What is the standard deviation of this portfolio?
              a)     5.16%
              b)     5.89%
              c)     6.11%
              d)     6.57%
              e)     7.02%

USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS
               Asset (A)                          Asset (B)

                                               27
              E(RA) = 16%                       E(RB) = 14%
               (A) = 3%                         (B) = 8%
               WA = 0.5                           WB = 0.5
                              COVA,B = 0.0014
30 What is the expected return of a portfolio of two risky assets if the expected return E(Ri),
             standard deviation (i), covariance (COVi,j), and asset weight (Wi) are as shown
             above?
             a)     11%
             b)     12%
             c)     13%
             d)     14%
             e)     15%

31 What is the standard deviation of this portfolio?
              a)     3.02%
              b)     4.88%
              c)     5.24%
              d)     5.98%
              e)     6.52%

       USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS

                Asset 1                       Asset 2
               E(R1) = 0.28                  E(R2) = 0.12
               E(1) = 0.15                  E(2) = 0.11
                 W1 = 0.42                    W2 = 0.58
                                r1,2 = 0.7

32 Calculate the expected return of the two stock portfolio.
              a)     0.107
              b)     0.1367
              c)     0.1169
              d)     0.1872
              e)     0.20

33 Calculate the expected standard deviation of the two stock portfolio.
              a)     0.1367
              b)     0.1872
              c)     0.1169
              d)     0.20
              e)     0.3950

       USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS

                Asset 1                              Asset 2

                                                28
              E(R1) = .12                        E(R2) = .16
              E(1) = .04                        E(2) = .06

34 Calculate the expected return and expected standard deviation of a two stock portfolio when
              r1,2 = - .60 and w1 = .75.
              a)        .13 and .0024
              b)        .13 and .0455
              c)        .12 and .0585
              d)        .12 and .5585
              e)        .13 and .6758

35 Calculate the expected returns and expected standard deviations of a two stock portfolio
              when r1,2 = .80 and w1 = .60.
              a)     .144 and .0002
              b)     .144 and .0018
              c)     .136 and .0045
              d)     .136 and .0455
              e)     .136 and .4554

36            Consider two securities, A and B. Security A and B have a correlation coefficient
              of 0.65. Security A has standard deviation of 12, and security B has standard
              deviation of 25. Calculate the covariance between these two securities.
              a)      300
              b)      461.54
              c)      261.54
              d)      195
              e)      200

37            Calculate the expected return for a three asset portfolio with the following

                     Asset           Exp. Ret.        Std. Dev             Weight
                     A               0.0675           0.12                 0.25
                     B               0.1235           0.1675               0.35
                     C               0.1425           0.1835               0.40

              a)     11.71%
              b)     11.12%
              c)     15.70%
              d)     14.25%
              e)     6.75%.




                                                 29
               EVALUATION OF PORTFOLIO PERFORMANCE

1   The major requirements of a portfolio manager include the following, except
              a)     Follow the client's policy statement.
              b)     Completely diversify the portfolio to eliminate all unsystematic risk.
              c)     The ability to derive above-average risk adjusted returns.
              d)     Completely diversify the portfolio to eliminate all systematic risk.
              e)     None of the above (that is, all are requirements of a portfolio manager)

2   Treynor showed that rational, risk-averse investors always prefer portfolio possibility lines
              that have
              a)      Zero slopes.
              b)      Slightly negative slopes.
              c)      Highly negative slopes.
              d)      Slightly positive slopes.
              e)      Highly positive slopes.

3   Sharpe's performance measure divides the portfolio's risk premium by the
               a)     Standard deviation of the rate of return.
               b)     Variance of the rate of return.
               c)     Slope of the fund's characteristic line.
               d)     Beta.
               e)     Risk free rate.

4   Which measure of portfolio performance allows analysts to determine the statistical
            significance of abnormal returns?
            a)      Sharpe measure
            b)      Jensen measure
            c)      Fama measure

                                               30
                d)      Treynor measure
                e)      None of the above

5    If the return increases as more global investments with low correlation are added to the
                 market portfolio, the efficient frontier moves
                 a)     Up and right.
                 b)     Up and left.
                 c)     Down and right.
                 d)     Down and left.
                 e)     Up only.

6    Information ratio portfolio performance measures
                a)    Adjust portfolio risk to match benchmark risk.
                b)    Compare portfolio returns to expected returns under CAPM.
                c)    Evaluate portfolio performance on the basis of return per unit of risk.
                d)    Indicate historic average differential return per unit of historic variability of
                      differential return.
                e)    None of the above.

7           Relative return portfolio performance measures
                a)     Adjust portfolio risk to match benchmark risk.
                b)     Compare portfolio returns to expected returns under CAPM.
                c)     Evaluate portfolio performance on the basis of return per unit of risk.
                d)     Indicate historic average differential return per unit of historic variability of
                       differential return.
                e)     None of the above.

8           Excess return portfolio performance measures
                a)    Adjust portfolio risk to match benchmark risk.
                b)    Compare portfolio returns to expected returns under CAPM.
                c)    Evaluate portfolio performance on the basis of return per unit of risk.
                d)    Indicate historic average differential return per unit of historic variability of
                      differential return.
                e)    None of the above.

9    For a poorly diversified portfolio the appropriate measure of portfolio performance would be
                a)    The Treynor measure because it evaluates portfolio performance on the
                      basis of return and diversification.
                b)    The Sharpe measure because it evaluates portfolio performance on the basis
                      of return and diversification.
                c)    The Treynor measure because it uses standard deviation as the risk measure.
                d)    The Sharpe measure because it uses beta as the risk measure.
                e)    None of the above.

10          Which of the following statements concerning performance measures is false?
               a)     The Sharpe measure examines both unsystematic and systematic risk.
                                                  31
                             b)    The Treynor measure examines systematic risk.
                             c)    The Jensen measure examines systematic risk.
                             d)    All three measures examine both unsystematic and systematic risk.
                             e)    None of the above (that is, all statements are true)

              11         A manager's superior returns could have occurred due to:
                            a)   an insightful asset allocation strategy, over weighting an asset class that
                                 earned high returns.
                            b)   investing in undervalued sectors.
                            c)   selecting individual securities that earned above average returns.
                            d)   Choices a and c
                            e)   All of the above



                    USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS

The portfolios identified below are being considered for investment. During the period under consideration Rf =
               .03.

                             Portfolio       Return        Beta        
                                A            0.16          1.0        0.15
                                B            0.22          1.5        0.10
                                C            0.11          0.6        0.08
                                D            0.18          1.1        0.12

              1    Using the Sharpe Measure, which portfolio performed best?
                              a)    A
                              b)    B
                              c)    C
                              d)    D
                              e)    Two portfolios are tied

              2    According to the Treynor Measure, which portfolio performed best?
                             a)      A
                             b)      B
                             c)      C
                             d)      D
                             e)      Two portfolios are tied

                    USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS

The portfolios identified below are being considered for investment. Assume that during the period under
               consideration Rf = .04.

                             Portfolio     Return          Beta          
                                                             32
                     W       0.18            1.8        0.06
                     X       0.21            0.9        0.10
                     Y       0.13            0.7        0.03
                     Z       0.16            1.5        0.07

3   Using the Sharpe Measure, which portfolio performed best?
               a)    W
               b)    X
               c)    Y
               d)    Z
               e)    Two portfolios are tied

4   According to the Treynor Measure, which portfolio performed best?
              a)      W
              b)      X
              c)      Y
              d)      Z
              e)      Two portfolios are tied



      USE THE FOLLOWING INFORMATION FOR THE NEXT THREE PROBLEMS

Consider the data presented below on three mutual funds and the market.

                                      Standard
              Fund         Beta     Deviation (%)     Return (%)     Rf (%)
              AAA          0.75          7.0            14              3
              BBB          1.05          5.0            18              3
              CCC          0.89          8.0            20              3
              Market       1.00          8.0            12              3

5      Compute the Sharpe Measure for the AAA fund.
            a)      4.49
            b)      2.74
            c)      1.57
            d)      1.70
            e)      1.27

6   Compute the Jensen Measure for the BBB fund.
              a)     4.49
              b)     2.74
              c)     4.25
              d)     5.55
              e)     8.99


                                              33
7   Compute the Treynor Measure for the CCC fund.
              a)     14.7
              b)     15.3
              c)     19.1
              d)     17.0
              e)     12.7




                                           34
      USE THE FOLLOWING INFORMATION FOR THE NEXT THREE PROBLEMS
              The data presented below has been collected at this point in time.
                                     Standard
              Fund         Beta    Deviation (%)     Return (%) Rf (%)
              AAA          1.05         4.98           16            6
              BBB          1.00         4.04           15            6
              CCC          0.92         3.13           11            6
              Market       1.00         3.75           13            6

8   Compute the Sharpe Measure for the AAA fund.
              a)     2.01
              b)     2.74
              c)     2.91
              d)     5.43
              e)     1.72

9   Compute the Jensen Measure for the BBB fund.
              a)     2.10
              b)     2.74
              c)     5.43
              d)     2.00
              e)     1.65

10 Compute the Treynor Measure for the CCC fund.
             a)     5.43
             b)     2.74
             c)     2.19
             d)     2.00
             e)     1.65

      USE THE FOLLOWING INFORMATION FOR THE NEXT THREE PROBLEMS
              The data presented below has been collected at this point in time.
                                      Standard
               Fund       Beta       Deviation (%) Return (%)           Rf (%)
                XXX       1.07           5.13           19                6
                YYY       1.02           4.28           17                6
                ZZZ       0.86           3.52           12                6
                Market    1.00           3.80           13                6
11 Compute the Sharpe Measure for the XXX fund.
             a)     6.98
             b)     2.35
             c)     2.53
             d)     3.86
             e)     1.72

                                              35
12 Compute the Jensen Measure for the YYY fund.
             a)     6.98
             b)     2.35
             c)     2.53
             d)     3.86
             e)     1.72

13     Compute the Treynor Measure for the ZZZ fund.
            a)      6.98
            b)      2.35
            c)      2.53
            d)      3.86
            e)      1.72


Given the following information evaluate the performance of Cloud Incorporated (CI).

              RCI = 0.17      BCI = 1.05          Rf = 0.07        Rm = 0.12
14 Calculate CI's risk.
              a)       0.1225
              b)       0.1000
              c)       0.0525
              d)       0.0475
              e)       0.0325


Given the following information evaluate the performance of Tyler Incorporated (TI).
               RTI = 0.18        BTI = 1.06       Rf = 0.06        Rm = 0.11

15 Calculate TI's risk.
              a)        0.0113
              b)        0.1200
              c)        0.0670
              d)        0.0530
              e)        0.0696


      THE FOLLOWING INFORMATION IS FOR THE NEXT THREE PROBLEMS

Consider the following information for four portfolios, the market and the risk free rate (RFR)

                             Portfolio        Return        Beta    SD
                             A1                0.15         1.25   0.182

                                                       36
                      A2           0.1        0.9      0.223
                      A3          0.12        1.1      0.138
                      A4          0.08        0.8      0.125
                      Market      0.11         1        0.2
                      RFR         0.03         0         0


16   Calculate the Sharpe Measure for each portfolio
         a)     A1=0.40, A2=0.31, A3=0.65, A4=0.66
         b)     A1=0.31, A2=0.66, A3=0.65, A4=0.40
         c)     A1=0.66, A2=0.65, A3=0.31, A4=0.40
         d)     A1=0.66, A2=0.31, A3=0.65, A4=0.40
         e)     None of the above


17   Calculate the Jensen alpha Measure for each portfolio
         a)     A1=0.014, A2=-0.002, A3=0.002, A4=-0.02
         b)     A1=0.002, A2=-0.02, A3=0.002, A4=-0.014
         c)     A1=0.02, A2=-0.002, A3=0.002, A4=-0.014
         d)     A1=0.02, A2=-0.002, A3=0.02, A4=-0.14
         e)     None of the above

18   Calculate the Treynor Measure for each portfolio
         a)     A1=0.0625, A2=0.0778, A3=0.0818, A4=0.096
         b)     A1=0.096, A2=0.0778, A3=0.0818, A4=0.0625
         c)     A1=0.096, A2=0.0818, A3=0.0778, A4=0.0625
         d)     A1=0.0778, A2=0.096, A3=0.0818, A4=0.0625
         e)     None of the above




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