Consider the following annual returns for Vanguard 500 Index Fund Investor Shares (VFINX) 2005 2006 2007 2008 10% -10% 1

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Consider the following annual returns for Vanguard 500 Index
Fund Investor Shares (VFINX)
2005
2006
2007
2008
10%
-10%
15%
-15%
Calculate the arithmetic average annual return over this
period.
2.00%
6.00%
0.00%
4.00%
Use the information for the question below.
If WiseGuy Inc. uses payback period rule to choose
projects, which of the projects (Project A or Project B) will
WiseGuy Inc. prefer?
Project A and Project B have the same ranking.
Project A
Cannot calculate a payback period without a discount rate.
Project B
When we combine stocks in a portfolio, the amount of risk that
is eliminated depends on the degree to which the stocks are
correlated with one another.
True
False
Consider the following annual returns for Vanguard 500 Index
Fund Investor Shares (VFINX)
2005
2006
2007
2008
10%
-10%
15%
-15%
Calculate the geometric average annual return over this
period.
-2.82%
1.55%
0.26%
-0.82%