1.According to the Capital Asset Pricing Model (CAPM), over a single time period, investors seek to maximize their:
　　A. Wealth and are concerned about the tails of return distributions.
　　B. Wealth and are not concerned about the tailsof return distributions.
　　C. Expected utility and are concerned about the tails of return distributions.
　　D. Expected utility and are not concerned about the tails of return distributions.
　　2.An experienced commodities risk manager is examining corn futures quotes from the CME Group. Which of the following observations would the risk manager most likely view as a potential problem with the quotation data?
　　A. The volume in a specific contract is greater than the open interest.
　　B. The prices indicate a mixture of normal and inverted markets.
　　C. The settlement price for a specific contract is above the high price.
　　D. There is no contract with maturity in a particular month.
　　3.Which of the following statements is incorrect regarding a Bernoulli distributed random variable.
　　I. It only has three possible outcomes.
　　II. It is commonly used for assessing whether or not a company defaults during a specified time period.
　　A. II only.
　　B. I only.
　　C. Both I and II.
　　D. Neither I nor II.
　　Answer:
　　1.D
　　CAPM assumes investors seek to maximize the expected utility of their wealth at the end of the period, and that when choosing their portfolios, investors only consider the first two moments of return distribution: the expected return and the variance. Hence, investors are not concerned with the tails of the return distribution.
　　2. C
　　The reported high price of a futures contract should reflect all prices for the day, so the settlement price should never be greater than the high price.
　　3.B
　　Bernoulli distributed random variable only has two possible outcomes. The outcomes can be defined as either a “success” or a “failure.”