1. Acme Inc.'s stock has a 20% chance of producing a 8% return, a 60% chance of producing a 14% return, and a 20% chance of producing a 10% return. What is the standard deviation (not the variance!) of the returns to Acme’s stock?
a. 2.53%
b. 2.57%
c. 2.45%
d. 2.32%
e. 2.68%
2. What is the price of a zero coupon (1,000 face value) bond with five years to maturity when the required rate of return is 4%?
a. $837.48
b. $747.26
c. $821.93
d. $822.70
e. $839.62