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FIN367 S08Quiz1B - FIN 367 Spring 2008 Quiz 1 Basic...

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FIN 367: Spring 2008 Quiz # 1: Basic Intuition about Risk and Return January 28, 2008 NAME: SECTION: Time allowed: 20 minutes. Maximum possible score: 20. NOTE: If I cannot understand your calculations, I will not be able to give you full credit even if your final answer is correct. You cannot say “these calculations are obvious.” If a problem is missing some key information that you think is necessary to solve the problem, please ask me to clarify the question or state your confusions clearly. Alternatively, please make appropriate assumptions, state them clearly and proceed. No credit will be awarded if you fail to state your confusions or assumptions explicitly even if the question is wrong . Partial credits may be awarded if you show your calculations or provide arguments to support your answers. 1
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Basic Intuition 1. (2 points) Which of the following statements about risk averse investors is true? (a) They only accept investments that offer risk premium over the risk-free rate.
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