Page 99 - CAPE Financial Services Syllabus Macmillan_Neat

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24. Martin has invested in multiple regional and global companies in the last 3 years. He earned
5%, 7%, and 9% respectively on his portfolio. What is the standard deviation of the returns
on Martin’s portfolio?

(A) 0.004
(B) 0.050
(C) 0.070
(D) 1.634

25. A businessman invests 35 percent of his wealth in a risky asset with an expected rate of
return of 0.25 with a variance of 0.012 and 65 percent in a T-bill that pays 5 percent.

The businessman’s corresponding portfolio's expected return and standard deviation are

(A) 0.120; 0.121
(B) 0.0456; 0.111
(C) 0.0645; 0.3546
(D) 0.087; 0.124

26. The average return for a portfolio over four years was 25%, and the average return standard
deviation was 18.5%. If the 90-day T-bill return was 7 % for this period, what was the
Sharpe measure for this period?

(A) 0.84
(B) 0.97
(C) 0.52
(D) 0.64

27. Wilmore purchases a bond with its current yield being greater than the coupon rate. The
bond's current price is expected to

(A) exceed the face value at maturity
(B) decline over the maturity of the bond
(C) increase over the maturity of the bond
(D) be less than the face value at maturity

28. If a bond is priced at $1000 with five years to maturity and a 10% coupon and semiannual
payments, the value of each payment of interest equals

(A) $40
(B) $50
(C) $75
(D) $100

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