6) Data set 1 year returns on investment x returns on investment y 2000 5% 2% 20
ID: 2648648 • Letter: 6
Question
6) Data set 1
year
returns on investment x
returns on investment y
2000
5%
2%
2001
6%
2%
2002
4%
2%
2003
6%
2%
2004
5%
2%
2005
4%
2%
2006
4%
2%
2007
5%
2%
2008
6%
2%
2009
6%
2%
2010
4%
2%
2011
5%
2%
2012
2%
2%
2013
1%
2%
Base your answers on Data Set 1. Use the Average, STDEV.s and CORR functions to answer the questions about data set 1. Assume the past is the best forecast of the future.
Numbers should be carried to 2 decimals in Excel .
The risk of returns on investment Y is 0%.
True
False
E unsystematic
Question 14
"The business and affairs of ExxonMobil are managed by or under the direction of its Board in accordance with New Jersey law. The directors' fiduciary duty is to exercise their business judgment in the best interests of ExxonMobil's shareholders".
This quote from the Corporate Governance Guidelines of Exxon Mobil is totally inconsistent with protection of the environment. In fact it will increase the likelihood that the Board takes excessive risks.
True
False
Question 16
Management of GrubHub have listed the following factors that may cause the price and/or the liquidity of GrubHub
year
returns on investment x
returns on investment y
2000
5%
2%
2001
6%
2%
2002
4%
2%
2003
6%
2%
2004
5%
2%
2005
4%
2%
2006
4%
2%
2007
5%
2%
2008
6%
2%
2009
6%
2%
2010
4%
2%
2011
5%
2%
2012
2%
2%
2013
1%
2%
Explanation / Answer
6. TRUE. Since the rate of return every year is same thus the standard deviation is nil and thus risk of return is 0.
14. TRUE. The statement is inconsistent because it should be stakeholders and not just shareholders.
16. FALSE as there are many specific points to the firm like any significant change in our management, fluctuations in our results of operations, etc.
17. FALSE. Since, mean of the return is 4.5% which gives variance equal to 2.11 which means standard deviation(risk of returns on investment) is 1.45 and not 2.51.
21. Percentage change in Standard Deviation = (1.13 - 1.45) / 1.45 = 25%(approx.) decrease
Percentage change in return = (4.5 - 3.88) / 4.5 = 3.8%
thus, TRUE.
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