Use Ross et al.’s First Lesson from Capital Market History to critique the following statement: “I usually invest more in higher-risk stocks than lower-risk bonds. I do this because, even though I may suffer greater losses, I expect to earn higher average returns in the future.”

A stock had returns of 23.62 percent, −8.45 percent, 13.95 percent, and 1.64 percent for the past four years. What is the variance of the returns?

Consider the three components of the term structure of interest rates. Which does not have a determined relation with maturity?

A stock had returns of 12.10 percent, −5.50 percent, 15.68 percent, and 2.33 percent for the past four years. What is the variance of the returns?

Dale and Enzo start a corporation together. Dale contributes $20,000 capital as a loan, while Enzo contributes $20,000 capital as an owner. They liquidate the corporation after one year, raising $28,000 in cash to payout to investors. Ignoring any interest on the debt, how much cash does Enzo receive?

A stock had returns of 12.05 percent, −5.88 percent, 19.16 percent, and 1.77 percent for the past four years. What is the variance of the returns?

Dale and Enzo start a corporation together. Dale contributes $5,000 capital as a loan, while Enzo contributes $5,000 capital as an owner. They liquidate the corporation after one year, raising $12,000 in cash to payout to investors. Ignoring any interest on the debt, how much cash does Enzo receive?

A stock had returns of 23.61 percent, −9.35 percent, 15.82 percent, and 2.26 percent for the past four years. What is the variance of the returns?

Based on historical data from 1925 to 2022, which of the following sequences correctly ranks the investments from highest to lowest risk premium?

Dale and Enzo start a corporation together. Dale contributes $5,000 capital as a loan, while Enzo contributes $5,000 capital as an owner. They liquidate the corporation after one year, raising $6,000 in cash to payout to investors. Ignoring any interest on the debt, how much cash does Enzo receive?