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1 Leah  Merryweather  stock  has  an  expected  rate  of  return  of  12

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1 Leah  Merryweather  stock  has  an  expected  rate  of  return  of  12.5%  and  a  standard

deviation  of  26.3%.  Which  one  of  the  following  best  describes  the  probability  that  this  stock

will  lose  40%  or  more  in  any  one  given  year?

1.   0.5%
2.   1.0%
3.   2.5%
4.   5.0%
5.   16.0%

Explain work

2 

Which of the following statements is true?

a. Except for tax-exempt investors and tax-deferred accounts, annual tax payments increase investment returns.

b. The only way to maintain purchasing power over time is to invest in bonds.

c. After adjusting for taxes, long-term bonds consistently outperform stocks.

d. An asset allocation decision for a taxable portfolio that does not include a substantial commitment to common stocks may make it difficult for the portfolio to maintain real value over time.

e. None of the above