If the variability of the returns on large-company stocks were to increase over the long-term

To convince investors to accept greater volatility, you must:    A.  decrease the risk premium. B.  increase the risk premium. C.  decrease the real return. D.  decrease the risk-free rate. E.  increase the risk-free rate. Refer to section 12.4

35.

If the variability of the returns on large-company stocks were to increase over the long-term, you would expect which of the following to occur as a result? I. decrease in the average rate of return II. increase in the risk premium III. increase in the 68 percent probability range of the frequency distribution of returns IV. decrease in the standard deviation    A.  I only B.  IV only C.  II and III only D.  I and III only E.  II and IV only Refer to section 12.4

36.

Which one of the following statements is correct based on the historical record for the period 1926-2010?    A.  The standard deviation of returns for small-company stocks was double that of large-company stocks. B.  U.S. Treasury bills had a zero standard deviation of returns because they are considered to be risk-free. C.  Long-term government bonds had a lower return but a higher standard deviation on average than did long-term corporate bonds. D.  Inflation was less volatile than the returns on U.S. Treasury bills. E.  Long-term government bonds underperformed intermediate-term government bonds. Refer to section 12.4

37.	What is the probability that small-company stocks will produce an annual return that is more than one standard deviation below the average?    A.  1.0 percent B.  2.5 percent C.  5.0 percent D.  16 percent E.  32 percent Refer to section 12.4