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Fundamentals of Corporate Finance, 3d Cdn. Ed. (Berk et al.)
Chapter 10 Risk and Return in Capital Markets
10.1 A First Look at Risk and Return
1) On average, stocks have delivered higher returns than bonds in the long run.
Answer: TRUE
Diff: 1 Type: TF
Skill: Conceptual
Objective: 10.1 Identify which types of securities have historically had the highest returns and
which have been the most volatile
2) In Canada over the long term, small stocks on the S&P/TSX have provided the highest return
followed by long-term Government of Canada bonds.
Answer: TRUE
Diff: 1 Type: TF
Skill: Conceptual
3) Stocks with high returns are expected to have:

A) high variability.
B) low variability.
C) no relation to variability.
D) inverse relationship with variability.
E) no variability.
Answer: A
Diff: 1 Type: MC
Skill: Conceptual
4) Historically, stocks have delivered a ________ return on average compared to Treasury bills
but have experienced ________ fluctuations in values.
A) higher, higher
B) higher, lower
C) lower, higher
D) lower, lower
E) higher, similar
Answer: A
Diff: 1 Type: MC
Skill: Conceptual
1
© 2020 Pearson Canada Inc.
5) Investors demand a higher return for investments that have larger fluctuations in values
because:
A) they do not like risk.
B) they are risk seeking.
C) they invest for the long term.
D) they are more expensive.
E) they have higher transaction costs.
Answer: A
Diff: 1 Type: MC
Skill: Conceptual
6) Which of the following investments offered the lowest overall return over the past fifty years?
A) S&P/TSX Composite Index
B) Treasury bills
C) S&P 500
D) corporate bonds
E) long-term Government of Canada bonds
Answer: B
Diff: 1 Type: MC
Skill: Definition
7) Which of the following investments offered the highest overall return over the past fifty
years?
A) Treasury bills
B) S&P 500
C) S&P/TSX Composite Index
D) corporate bonds
Answer: C
Diff: 1 Type: MC
Skill: Definition
2
8) Which of the following investments had the largest fluctuations in overall return over the past
fifty years?
A) S&P/TSX Composite Index
B) S&P 500
C) corporate bonds
D) Treasury bills
Answer: A
Diff: 1 Type: MC
Skill: Definition
9) Why must riskier investments offer higher expected returns?

Answer: Because investors are risk averse, and would prefer to avoid fluctuations in the value of
their investments, risker investments must offer higher expected returns.
Diff: 1 Type: SA
Skill: Conceptual
10.2 Historical Risks and Returns of Stocks
1) Suppose you invested $60 in the Ishares Dividend Stock Fund (DVY) a month ago. It paid a
dividend of $0.70 today and then you sold it for $65. What was your return on the investment?
A) 8.25%
B) 9.00%
C) 9.50%
D) 9.75%
E) 10.00%
Answer: C
Explanation: $(65 + 0.7) - 60 = 5.7; 5.7 / 60 = 9.5%
Diff: 1 Type: MC
Skill: Analytical
Objective: 10.2 Compute the average return and volatility of returns from a set of historical asset
prices
3
2) Suppose you invested $55 in CIBC stock one month ago. Today, it paid a dividend of $0.35,
and then you sold it for $56.25. What was the return on your investment?
A) 2.9%
B) 2.3%
C) 2.2%
D) 2.8%
E) 1.6%
Answer: A
Explanation: 0.35/55 + (56.25 - 55)/55 = 2.9%
Diff: 1 Type: MC
Skill: Analytical
prices
3) Suppose you invested $7.55 in Big Rock Brewery one month ago. Today, it paid a dividend of
$0.10, and then you sold it for $7.35. What was the return on your investment?
A) 1%
B) -1%
C) -1.3%
D) 4.2%
E) 1.1%
Answer: C
Explanation: 0.10/7.55 + (7.35 - 7.55)/7.55 = -1.3%
Diff: 1 Type: MC
Skill: Analytical
prices
4) Greg purchased stock in Bear Stearns and Co. at a price of $89 per share. The company was
acquired by JP Morgan at a price of $10 per share. What is Greg's return on his investment?
A) -88.76%
B) -96.25%
C) -79.00%
D) -85.45%
E) -90.21%
Answer: A
Explanation: 10 - 89 = - 79; -79 / 89 = -88.76%
Diff: 2 Type: MC
Skill: Analytical
prices
4
5) You own shares in Yahoo that were purchased at a price of $21 per share. Microsoft has
offered to purchase Yahoo and buy your shares at a price of $31 per share. What will be your
return if you tender your shares to Microsoft and the deal is completed?
A) 47.62%
B) 33.45%
C) 49.65%
D) 43.34%
E) 37.71%
Answer: A
Explanation: 31 - 21 = 10; 10 / 21 = 47.62%
Diff: 1 Type: MC
Skill: Analytical
prices
6) Suppose you invested $98 in the Ishares High Yield Fund (HYG) a month ago. It paid a
dividend of $0.47 today and then you sold it for $99. What was your dividend yield and capital
gains yield on the investment?
A) 0.45%, 1.09%
B) 0.48%, 1.02%
C) 0.48%, 1.08%
D) 1.02%, 1.12%
E) 0.75%, 0.98%
Answer: B
Explanation: Div yld = 0.47 / 99 = 0.48%; cap gain = 99 - 98 = 1; 1 / 98 = 1.02%
Diff: 3 Type: MC
Skill: Analytical
prices
7) Suppose you invested $45 in TD Bank one month ago. It paid a dividend of $0.60, and you
sold it right after the dividend was paid for $44.90. What was your dividend yield and capital
gains yield on the investment?
A) 1.3%, -0.2%
B) -0.2%, 1.3%
C) 1.3%, 1.1%
D) 1.1%, -0.2%
E) 1.1%, 0.2%
Answer: A
Explanation: Div yld = 0.60 / 45 = 1.3%; cap gain = (44.9 - 45)/45 = -0.2%
Diff: 2 Type: MC
Skill: Analytical
prices
5
8) Suppose you invested $150 in Tesla Motors one month ago. It paid a dividend of $1.55, and
you sold it right after the dividend was paid for $162. What was your realized return from
holding the stock?
A) 6%
B) 1%
C) 9%
D) 8%
E) 7%
Answer: C
Explanation: Div yld = 1.55 / 150 = 1%; cap gain =(162 - 150)/150 = 8%
Realized return = 1% + 8% = 9%
Diff: 2 Type: MC
Skill: Analytical
prices
9) Suppose you invested $33 in Pfizer one month ago. It paid a dividend of $0.88 and you sold it
right after the dividend was paid for $31.14. What was your realized return from holding the
stock?
A) 2.7%
B) 8.7%
C) 8.3%
D) -2.9%
E) -5.6%
Answer: D
Explanation: Div yld = 0.88 / 33 = 2.7%; cap gain = (31.14 - 33)/33 = -5.6%
Realized return = 2.7 - 5.6 = -2.9%
Diff: 2 Type: MC
Skill: Analytical
prices
10) Your investment over one year yielded a capital gains yield of 5% and no dividend yield. If
the sale price was $119 per share, what was the cost of the investment?
A) $126.25
B) $111.67
C) $113.33
D) $117.25
E) $115.57
Answer: C
Explanation: 119 / 1.05 = 113.33
Diff: 1 Type: MC
Skill: Analytical
prices
6
11) Your investment over one year yielded a capital gains yield of 7% and a dividend yield of
4%. If the sale price was $86 per share, what was the cost of the investment?
A) $79.98
B) $86.00
C) $82.69
D) $77.47
E) $80.37
Answer: E
Explanation: Capital gain yield = 7%, 86/1.07 = 80.37
Diff: 1 Type: MC
Skill: Analytical
prices
12) Your investment over one year had a realized return of 9% and a dividend yield of 6%. If the
sale price was $45 per share, what was the cost of the investment?
A) $41.28
B) $43.69
C) $44.21
D) $45.00
E) $46.35
Answer: B
Explanation: Capital Gain Yield = 9 -6 = 3%; 45/1.03 = $43.69
Diff: 2 Type: MC
Skill: Analytical
prices
13) Your investment over one year had a realized return of 7% and a dividend of $1.25. If the
sale price was $36 per share, what was the cost of the investment?
A) $32.15
B) $32.78
C) $33.64
D) $34.81
E) $34.90
Answer: D
Explanation: (36 + 1.25)/1.07 = $34.81
Diff: 2 Type: MC
Skill: Analytical
prices
7
14) Amazon.com stock prices gave a realized return of 5%, -5%, 10%, and -10% over four
successive quarters. What is the annual realized return for Amazon.com for the year?
A) -1.25%
B) 2.50%
C) 0.00%
D) 1.25%
E) 1.00%
Answer: A
Explanation: 1.05 × 0.95 × 1.10 × 0.9 = 0.9875; 0.9875 - 1 = -1.25%
Diff: 3 Type: MC
Skill: Analytical
prices
15) Tesla Motors stock had a realized return of 18%, 4%, -12%, and -6% over four successive
quarters. What is your annual realized return if you bought Tesla at the beginning of the year and
sold it at the end of the year?
A) 1.5%
B) 1%
C) 4%
D) 2.5%
E) 0%
Answer: A
Explanation: 1.18 × 1.04 × 0.88 × 0.94 - 1 = 1.5%
Diff: 2 Type: MC
Skill: Analytical
prices
16) Lululemon Athletica stock had a realized return of 7%, -2%, -3%, and -8% over four
successive quarters. What is your annual realized return if you bought Lululemon at the
beginning of the year and sold it at the end of the year?
A) -1.5%
B) 21.4%
C) -6%
D) -6.4%
E) 0%
Answer: D
Explanation: 1.07 × .98 × .97 × .92 - 1 = -6.4%
Diff: 2 Type: MC
Skill: Analytical
prices
8
17) IGM Realty had a price of $30, $30, $35, $33, and $25 at the end of the last five quarters. If
IGM pays a dividend of $2 at the end of each quarter, what is the annual realized return on IGM?
A) 8.61%
B) 7.6%
C) 7.10%
D) 8.09%
E) 8.24%
Answer: B
Explanation:
Cumulative
Date Price Dividend Return Return
1 $30 $2
2 $30 $2 6.667%
3 $35 $2 23.333% 1.3154%
4 $33 $2 0% 1.3154%
5 $25 $2 -18.1819% 1.076%
Ann. Ret = 7.6%
Diff: 3 Type: MC
Skill: Analytical
prices
18) You purchased Enron stock at a price of $30 per share. Its price was $20 after six months and
the company declared bankruptcy at the end of the next six months. The realized return over the
last year is:
A) -99%
B) -75%
C) -150%
D) -100%
E) -125%
Answer: D
Explanation: 0 - 30 / 30 = -100%
Diff: 1 Type: MC
Skill: Analytical
prices
9
19) The S&P TSX Composite index delivered a return of 14.48%, 24.13%, 17.26% and 9.83%
over four successive years. What is the arithmetic average annual return per year?
A) 16.43%
B) 20.8%
C) 14.48%
D) 18.54%
E) 15.96%
Answer: A
Explanation: (14.48 + 24.13 + 17.26 + 9.83)/4 = 16.43%
Diff: 1 Type: MC
Skill: Analytical
prices
20) The S&P TSX Composite index delivered annual returns of 10.55%, -8.32%, 21.08% and
9.10% from 2014 to 2017. What was the average compound annual return per year?
A) 7.5%
B) 6.3%
C) 7.6%
D) 7.0%
E) 6.6%
Answer: C
Explanation: $1 grows to 1 × 1.1055 × 0.9168 × 1.2108 × 1.091 = $1.34 over 4 years.
1.34(1/4) - 1 = 7.6%
Diff: 2 Type: MC
Skill: Analytical
prices
9.10% from 2014 to 2017. If you invested $10,000 in the index at the beginning of 2010, what
amount would your investment have been worth at the end of 2013?
A) $13,256
B) $13,388
C) $12,908
D) $12.974
E) $14.388
Answer: B
Explanation: $10000 grows to 10000 × 1.1055× 0.9168 × 1.2108 × 1.091 = $13,888
Diff: 2 Type: MC
Skill: Analytical
prices
10
9.10% from 2014 to 2017. What is the standard deviation of the index returns over these four
years?
A) 131.67%
B) 8.14%
C) 7.27%
D) 9.94%
E) 12.18%
Answer: E
Explanation: Average return = (10.55 - 8.32 + 21.08 + 9.10) / 4 = 8.10;
Variance = ((10.55 - 8.10)2 + (-8.32 - 8.10)2 + (21.08 -8.10)2 + (9.10 - 8.10)2))/(4 - 1) = 148.36
Standard deviation = 148.360.5 = 12.18%
Diff: 3 Type: MC
Skill: Analytical
prices
9.10% from 2014 to 2017. What is a 95% confidence interval for the 2014 return?
A) 4.20% to 11.47%
B) 7.27% to 11.47%
C) -4.08% to 20.28%
D) -2.67% to 17.21%
E) 6.91% to 7.63%
Answer: C
Explanation: Average return = (10.55 - 8.32 + 21.08 + 9.10) / 4 = 8.10;
Variance = ((10.55 - 8.10)2 + (-8.32 - 8.10)2 + (21.08 -8.10)2 + (9.10 - 8.10)2))/(4 - 1) = 148.36
Average +/- 2 × standard deviation = 8.10 - 12.18 to 8.10 + 12.18 = -4.08% to 20.28%
Diff: 3 Type: MC
Skill: Analytical
prices
11
24) You purchase a 30-year, zero-coupon bond for a price of $20. The bond will pay back $100
after 30 years and make no interim payments. The annual compounded return (geometric average
return) on this investment is:
A) 5.31%
B) 6.54%
C) 4.78%
D) 5.51%
E) 4.96%
Answer: D
Explanation: Using a financial calculator: N = 30, PV = -20, FV = 100; CPT = I/Y; I/Y = 5.51%
Diff: 1 Type: MC
Skill: Analytical
prices
25) Suppose that a stock gave a realized return of 20% over a two-year time period and a 10%
return over the third year. The geometric average annual return is:
A) 9.70%
B) 11.20%
C) 14.96%
D) 15.00%
E) 16.55%
Answer: E
Explanation: 1.2 × 1.2 × 1.1 = 1.584; geometric average = (1.584)0.333 = 1.1655; hence =
16.55%
Diff: 1 Type: MC
Skill: Analytical
prices
26) Suppose the quarterly arithmetic average return for a stock is 5% per quarter and the stock
gives a return of 10% each over the next two quarters. The arithmetic average return over the six
quarters is:
A) 9%
B) 6.67%
C) 7.5%
D) 10%
E) 12%
Answer: B
Explanation: (5 + 5 + 5 + 5 + 10 + 10) / 6 = 6.67%
Diff: 1 Type: MC
Skill: Analytical
prices
12
27) The geometric average annual return for a large capitalization stock portfolio is 12% for ten
years and 5% per year for the next five years. The geometric average annual return for the entire
15-year period is:
A) 9.95%
B) 9.62%
C) 9.11%
D) 10.23%
E) 10.97%
Answer: B
Explanation: Compound return for first ten years = (1.12)10 = 3.1058;
compound return for next 5 years = (1.05)5 = 1.27628;
total return over 15 years = 3.1058 × 1.27628 = 3.9639;
geometric average annual return = (3.9639)(1/15) = 1.0962; hence answer = 9.62%
Diff: 3 Type: MC
Skill: Analytical
prices
28) Ford Motor Company had realized returns of 10%, 20%, 20%, and 10% over four quarters.
What is the quarterly standard deviation of returns for Ford calculated from this sample?
A) 5.77%
B) 5.11%
C) 5.99%
D) 5.00%
E) 6.12%
Answer: A
Explanation: Average return = (10 + 20 + 20 +10) / 4 = 15;
Variance = ((10 - 15)2 + (20 - 15)2 + (20 - 15)2 + (10 - 15)2))/(4 - 1) = 33.33
Diff: 3 Type: MC
Skill: Analytical
prices
13
29) Ivanhoe Energy Inc had realized returns of 5.5%, -3.6%, 8%, and 7.5% over four quarters.
What is the quarterly standard deviation of returns for Ivanhoe?
A) 21.95%
B) 29.26%
C) 5.41%
D) 4.68%
E) 4.35%
Answer: C
Explanation: Average return = (5.5 - 3.6 + 8 + 7.5) / 4 = 4.35;
Variance = ((5.5 - 4.35)2 + (-3.6 - 4.35)2 + (8 - 4.35)2 + (7.5 -4.35)2))/(4 - 1) = 29.26
Standard deviation =29.260.5 = 5.41%
Diff: 3 Type: MC
Skill: Analytical
prices
30) Bombardier Inc had realized returns of -3%, -2%, -5%, and -7% over four quarters. What is
the quarterly standard deviation of returns for Bombardier?
A) 1.9%
B) 3.7%
C) 4.9%
D) 2.2%
E) 3.4%
Answer: D
Explanation: Average return = (-3 -2 -5 -7) / 4 = -4.25;
Variance = ((-3 + 4.25)2 + (-2 + 4.25)2 + (-5 + 4.25)2 + (-7 + 4.25)2))/(4 - 1) = 4.92
Diff: 3 Type: MC
Skill: Analytical
prices
14
31) The standard deviation of returns of:
I. small capitalization stocks is higher than that of large capitalization stocks.
II. large capitalization stocks is lower than that of corporate bonds.
III. corporate bonds is higher than that of Treasury bills.
Which statement is TRUE?
A) I and III
B) I, II, and III
C) I and II
D) I only
E) II only
Answer: A
Diff: 1 Type: MC
Skill: Conceptual
prices
32) Treasury bill returns are 5%, 4%, 3%, and 6% over four years. The standard deviation of
returns of Treasury bills is:
A) 1.51%
B) 1.11%
C) 1.00%
D) 1.29%
E) 1.43%
Answer: D
Explanation: Average return = (5 + 4 + 3 + 6) / 4 = 4.5;
standard deviation = ((5 - 4.5)2 + (4 - 4.5)2 + (3 - 4.5)2 + (6 - 4.5)2)) / (4 - 1) = 1.29%
Diff: 3 Type: MC
Skill: Analytical
prices
33) If asset A's return is exactly two times asset B's return, then following risk return tradeoff,
the standard deviation of asset A should be ________ times the standard deviation of asset B.
A) 3
B) 2
C) 1
D) 4
E) 5
Answer: B
Diff: 1 Type: MC
Skill: Conceptual
prices
15
34) If the returns on a stock index can be characterized by a normal distribution with mean 12%,
the probability that returns will be lower than 12% over the next period equals:
A) 50%
B) 25%
C) 46%
D) 33%
E) 70%
Answer: A
Diff: 2 Type: MC
Skill: Conceptual
prices
35) The probability mass between two standard deviations around the mean for a normal
distribution is:
A) 66%
B) 90%
C) 75%
D) 95%
E) 50%
Answer: D
Diff: 2 Type: MC
Skill: Conceptual
prices
36) The Ishares Bond Index fund (TLT) has a mean and annual standard deviation of returns of
7% and 10%, respectively. What is the 66% confidence interval for the returns on TLT?
A) -5%,10%
B) 7%,10%
C) -3%, 17%
D) -10%,10%
E) -5%, 15%
Answer: C
Explanation: 66% confidence interval = mean - standard deviation, mean + standard deviation;
7 - 10 = -3%; 7 + 10 = 17%
Diff: 2 Type: MC
Skill: Analytical
prices
16
37) The average annual return over the period 1886-2006 for stocks that comprise the S&P 500
is 10%, and the standard deviation of returns is 20%. Based on these numbers, what is a 95%
confidence interval for 2007 returns?
A) -15%,25%
B) -20%,40%
C) -30%, 50%
D) -30%,40%
E) -10%, 30%
Answer: C
Explanation: 10 - 2 × 20 = -30%; 10 + 2 × 20 = 50%
Diff: 2 Type: MC
Skill: Analytical
prices
is 12%, and the standard deviation of returns is 20%. Based on these numbers, what is a 95%
A) -28%, 52%
B) -10%,40%
C) -20%,35%
D) -15%, 35%
E) -5%, 25%
Answer: A
Explanation: 12 - 2 × 20 = -28%; 12 + 2 × 20 = 52%
Diff: 2 Type: MC
Skill: Analytical
prices
is 10.5%, and the standard deviation of returns is 18.5%. Based on these numbers, what is a 95%
A) -18.5%, 18.5%
B) -10%, 10%
C) -26.5%, 47.5%
D) -37%, 37%
E) -8%, 29%
Answer: C
Explanation: 10.5 - 2 × 18.5 = -26.5%; 10.5 + 2 × 18.5 = 47.5%
Diff: 2 Type: MC
Skill: Conceptual
prices
17
40) If a stock pays dividends at the end of each quarter, with realized returns of R1, R2, R3, and
R4 each quarter, then the annual realized return is calculated as:
A) Rannual = (1 + R1)(1 + R2)(1 + R3)(1 + R4) - 1
B) Rannual = R1 + R2 + R3 + R4
C) Rannual = (1 + R1)(1 + R2)(1 + R3)(1 + R4)
D) Rannual =
E) Rannual = (1 + R1)(1 + R2)(1 + R3)(1 + R4) + 1

Answer: A
Diff: 2 Type: MC
Skill: Analytical
prices
Use the table for the question(s) below.
Consider the following price and dividend data for Ford Motor Company:
Date Price ($) Dividend ($)

December 31, 2004 $14.64
January 26, 2005 $13.35 $0.10
April 28, 2005 $9.14 $0.10
July 29, 2005 $10.74 $0.10
October 28, 2005 $8.02 $0.10
December 30, 2005 $7.72
41) Assume that you purchased Ford Motor Company stock at the closing price on December 31,
2004 and sold it after the dividend had been paid at the closing price on January 26, 2005. Your
dividend yield for this period is closest to:
A) -8.15%
B) -8.80%
C) 0.70%
D) 0.75%
E) 1.25%
Answer: C
Explanation: div / P0 = 0.10 / 14.64 = 0.0068
Diff: 2 Type: MC
Skill: Analytical
prices
18
capital gains rate (yield) for this period is closest to:
A) 0.70%
B) 0.75%
C) -8.80%
D) -8.15%
E) 1.25%
Answer: C
Explanation: (P1 - P0) / P0 = (13.35 - 14.64) / 14.64 = -0.088115
Diff: 2 Type: MC
Skill: Analytical
prices
total return rate (yield) for this period is closest to:
A) 0.70%
B) -8.13%
C) -8.80%
D) 0.75%
E) 1.25%
Answer: B
Explanation: (P1 + D1 - P0) / P0 = (13.35 + 0.10 - 14.64) / 14.64 = -0.08128
Diff: 2 Type: MC
Skill: Analytical
prices
19
2014 and sold it at the closing price on December 30, 2015. Your realized annual return is for the
year 2015 is closest to:
A) -44.5%
B) -45.1%
C) -47.3%
D) -48.5%
E) -46.3%
Answer: B
Explanation:
Price (1 +
Date ($) Dividend ($) Return return)
December 31,
2014 $14.64 1 1
January 26, 2015 $13.35 $0.10 -8.13% 0.918716 0.918716
April 28, 2015 $9.14 $0.10 -30.79% 0.692135 0.635875
July 29, 2015 $10.74 $0.10 18.60% 1.185996 0.754145
October 28, 2015 $8.02 $0.10 -24.39% 0.756052 0.570173
December 30,
2015 $7.72 -3.74% 0.962594 0.548845
The Product of
(1 + returns) - 1 = -0.45116
The last column in the table contains the cumulative product of (1 + returns)
Diff: 3 Type: MC
Skill: Analytical
prices
20
Consider the following realized annual returns:
S&P 500 IBM

Realized Realized
Year-end Return Return
1996 23.6% 46.3%
1997 24.7% 26.7%
1998 30.5% 86.9%
1999 9.0% 23.1%
2000 -2.0% 0.2%
2001 -17.3% -3.2%
2002 -24.3% -27.0%
2003 32.2% 27.9%
2004 4.4% -5.1%
2005 7.4% -11.3%
45) The average annual return on the S&P 500 from 1996 to 2005 is closest to:
A) 8.75%
B) 4.00%
C) 7.10%
D) 9.75%
E) 5.85%
Answer: A
Explanation: Rannual = = = = 8.82%
Diff: 1 Type: MC
Skill: Analytical
prices
46) The average annual return on IBM from 1996 to 2005 is closest to:
A) 18.2%
B) 16.40%
C) 18.7%
D) 29.9%
E) 20.24%
Answer: B
Explanation: Rannual = = = = 16.45%
Diff: 1 Type: MC
Skill: Analytical
prices
21
47) The average annual return over the period 1926-2009 for the S&P 500 is 11.7%, and the
standard deviation of returns is 20.5%. Based on these numbers, what is a 95% confidence
interval for 2010 returns?
A) 1.5%,, 22.0%
B) -8.8%, 32.2%
C) -29.3%, 52.7%
D) -29.3%, 73.2%
E) -14.4%, 26.2%
Answer: C
Explanation: 11.7% - (2 × 20.5%) = -29.3%; 11.7% +(2 × 20.5%) = 52.7%
Diff: 2 Type: MC
Skill: Analytical
prices
48) The average annual return over the period 1926-2009 for the S&P 500 is 11.7%, and the
A) 1.5%,, 22.0%
B) -8.8%, 32.2%
C) -29.3%, 52.7%
D) -29.3%, 73.2%
E) -12.6%, 29.8%
Answer: B
Explanation: 11.7% - (1 × 20.5%) = -8.8%; 11.7% +(1 × 20.5%) = 32.2%
Diff: 3 Type: MC
Skill: Analytical
prices
49) The average annual return over the period 1926-2009 for small stocks is 22.1%, and the
A) 11.1%, 33.2%
B) 0%, 44.2%
C) -22.1%, 44.2%
D) -22.1%, 66.3%
E) -12.5%, 45.7%
Answer: D
Explanation: 22.1% - (2 × 22.1%) = -22.1%; 22.1% +(2 × 22.1%) = 66.3%
Diff: 2 Type: MC
Skill: Analytical
prices
22
50) What are the two components of realized return from a stock investment?
Answer: The total realized return earned from a stock investment comprises two components:
dividend yield and capital gains yield.
Diff: 1 Type: SA
Skill: Conceptual
prices
51) Which type of investment has historically had the highest volatility?
Answer: Investments in small stocks have historically witnessed the highest volatility.
Diff: 1 Type: SA
Skill: Conceptual
prices
52) Which type of investment has historically had the lowest volatility?
Answer: Investments in Treasury bills have historically witnessed the lowest volatility.
Diff: 1 Type: SA
Skill: Conceptual
prices
10.3 The Historical Tradeoff between Risk and Return
1) Rational investors may be willing to choose an investment that has additional risk but does not
offer additional reward.
Answer: FALSE
Diff: 1 Type: TF
Skill: Conceptual
Objective: 10.3 Understand the trade-off between risk and return for large portfolios versus
individual stocks
2) Historical evidence on the returns of large portfolios of stock and bonds shows that
investments with higher volatility have rewarded investors with higher returns.
Answer: TRUE
Diff: 1 Type: TF
Skill: Conceptual
individual stocks
3) There is a clear link between the volatility of returns for individual stocks and and the returns
for individual stocks.
Answer: FALSE
Diff: 1 Type: TF
Skill: Conceptual
individual stocks
23
4) For large portfolios, investors should expect a higher return for higher volatility, but this does
not hold true for individual stocks.
Answer: TRUE
Diff: 2 Type: TF
Skill: Conceptual
individual stocks
5) While ________ seems to be a reasonable measure of risk when evaluating a large portfolio,
the ________ of an individual security does not explain the size of its average return.
A) volatility, volatility
B) the mean return, standard deviation
C) mode, volatility
D) volatility, compound annual return
E) volatility, mean return
Answer: A
Diff: 1 Type: MC
Skill: Conceptual
individual stocks
6) There is an overall relationship between ________ and ________—larger stocks have a lower
volatility overall.
A) size, risk
B) mean, standard deviation
C) risk aversion, size
D) volatility, mean
E) return, size
Answer: A
Diff: 1 Type: MC
Skill: Conceptual
individual stocks
7) Which of the following statements is TRUE?

A) On average, smaller stocks have lower volatility than Treasury bills.
B) Portfolios of smaller stocks are typically less volatile than individual small stocks.
C) On average, smaller stocks have lower returns than larger stocks.
D) On average, Treasury bills have higher returns than world stocks.
E) Portfolios of large stocks are typically more volatile than individual small stocks.
Answer: B
Diff: 1 Type: MC
Skill: Conceptual
individual stocks
24
8) Is volatility a reasonable measure of risk when evaluating large portfolios?
Answer: Yes, volatility is a reasonable measure of risk for large portfolios, once they are fully
diversified.
Diff: 1 Type: SA
Skill: Conceptual
individual stocks
9) When looking at investment portfolios historically, was there a pattern between returns and
volatility?
Answer: Yes, there is a direct relationship between return and volatility—i.e., high volatility
investments have generally yielded higher returns.
Diff: 1 Type: SA
Skill: Conceptual
individual stocks
10) Is volatility a reasonable measure of risk when evaluating the investment in a single stock?
Answer: No. In the case of an investment in a single stock, the volatility does not explain the
size of its average return, because the stock has its own unique risk that can still be diversified
away.
Diff: 1 Type: SA
Skill: Conceptual
individual stocks
10.4 Common Versus Independent Risk
1) The risk that inflation rates are likely to increase in the next year is an example of common
risk.
Answer: TRUE
Diff: 1 Type: TF
Skill: Conceptual
Objective: 10.4 Describe the difference between common and independent risk
2) A portfolio of stocks where each stock has a large component of independent risk benefits
when such stocks are held in a portfolio, because the independent risks are averaged out. This is
also referred to as diversification of risks.
Answer: TRUE
Diff: 1 Type: TF
Skill: Conceptual
25
3) Risk that is linked across outcomes is called:
A) diversifiable risk.
B) common risk.
C) uncorrelated risk.
D) independent risk.
E) systematic risk.
Answer: B
Diff: 1 Type: MC
Skill: Definition
Use the information for the question(s) below.
Big Cure and Little Cure are both pharmaceutical companies. Big Cure presently has a potential
"blockbuster" drug before the Food and Drug Administration (FDA) waiting for approval. If
approved, Big Cure's blockbuster drug will produce $1 billion in net income for Big Cure. Little
Cure has ten separate, less important drugs before the FDA waiting for approval. If approved,
each of Little Cure's drugs would produce $100 million in net income for Little Cure. The
probability of the FDA approving a drug is 50%.
4) What is the expected payoff for Big Cure's Blockbuster drug?

A) $100 million
B) $0
C) $1 billion
D) $500 million
E) $50 million
Answer: D
Explanation: expected payoff = prob of payoff × amount if successful
= 0.5 × $1 billion = $500 million
Diff: 1 Type: MC
Skill: Analytical
5) What is the expected payoff for Little Cure's ten drugs?

A) $500 million
B) $100 million
C) $1 billion
D) $0
E) $50 million
Answer: A
Explanation: expected payoff = prob of payoff × amount if successful
= 0.5 × $100 = $50 million for each drug
$50 million × 10 drugs = $500 million
Diff: 1 Type: MC
Skill: Analytical
26
10.5 Diversification in Stock Portfolios
1) Independent risks can be diversified by holding a large number of uncorrelated assets with
independent risks.
Answer: TRUE
Diff: 1 Type: TF
Skill: Conceptual
Objective: 10.5 Explain how diversified portfolios remove independent risk, leaving common
risk as the only risk requiring a risk premium
2) A stock whose return does not depend on overall economic conditions has a low systematic
risk.
Answer: FALSE
Diff: 1 Type: TF
Skill: Conceptual
3) Investors should earn a risk premium for bearing unsystematic risk.

Answer: FALSE
Diff: 1 Type: TF
Skill: Conceptual
4) Stocks have both diversifiable risk and undiversifiable risk, but only diversifiable risk is
rewarded with higher expected returns.
Answer: FALSE
Diff: 1 Type: TF
Skill: Conceptual
5) In general, it is possible to eliminate ________ risk by holding a large portfolio of assets.

A) unsystematic
B) systematic
C) unsystematic and systematic
D) unwanted
E) market
Answer: A
Diff: 1 Type: MC
Skill: Conceptual
27
6) Apple computer's stock price jumped when it announced that its revenue had increased
because of the successful launch of iPhone and the increased sales of Macintosh computers. This
is an example of
A) market risk.
B) unsystematic risk.
C) systematic risk.
D) common risk.
E) unwanted risk.
Answer: B
Diff: 1 Type: MC
Skill: Conceptual
7) The risk premium of a security is determined by its ________ risk and does not depend on its
________ risk.
A) systematic, undiversifiable
B) systematic, unsystematic
C) diversifiable, diversifiable
D) diversifiable, unsystematic
E) unsystematic, diversifiable
Answer: B
Diff: 1 Type: MC
Skill: Conceptual
8) The risk premium is the difference between the average return on a security and the average
return for:
A) long-term Government of Canada bonds.
B) a portfolio of securities with similar risk.
C) a broad-based market portfolio like the S&P 500 index.
D) Treasury bills.
E) corporate bonds.
Answer: D
Diff: 1 Type: MC
Skill: Definition
28
Consider the following average annual returns:
Average
Investment Return
Small Stocks 23.2%
S&P 500 13.2%
Corporate Bonds 7.5%
Treasury Bonds 6.2%
Treasury Bills 4.8%
9) What is the risk premium for the portfolio of small stocks?

A) 10.0%
B) 15.7%
C) 18.4%
D) 17.0%
E) 17.5%
Answer: C
Explanation:
Average Average Return -
Investment Return Treasury Bill Return
Small Stocks 23.2% 18.40%
S&P 500 13.2% 8.40%
Corporate Bonds 7.5% 2.70%
Treasury Bonds 6.2% 1.40%
Treasury Bills 4.8% 0.0%
Diff: 1 Type: MC
Skill: Analytical
29
10) What is the risk premium for the S&P 500?
A) 5.7%
B) 7.0%
C) 0%
D) 8.4%
E) 4.5%
Answer: D
Explanation:
Investment Return Treasury Bill Return
S&P 500 13.2% 8.40%
Treasury Bills 4.8%
Diff: 1 Type: MC
Skill: Analytical
11) What is the risk premium for corporate bonds?

A) 2.7%
B) 1.3%
C) -5.7%
D) 0%
E) 8.4%
Answer: A
Explanation:
Investment Return Treasury bill Return
S&P 500 13.2% 8.40%
Treasury Bills 4.8%
Diff: 1 Type: MC
Skill: Analytical
30
12) What is the risk premium for Treasury bills?
A) 0%
B) -8.4%
C) -2.7%
D) -1.4%
E) -18.4%
Answer: A
Explanation:
Investment Return Treasury bill Return
S&P 500 13.2% 8.40%
Treasury Bills 4.8% 0.00%
Diff: 1 Type: MC
Skill: Analytical
13) When investing for a long horizon, investors care about the volatility of ________ returns
and not the volatility of ________ returns.
A) average, cumulative
B) cumulative, average
C) mean, cumulative
D) mean, average
E) average, mean
Answer: B
Diff: 1 Type: MC
Skill: Conceptual
14) Many former employees at Enron, an energy trading and supply company, had a large part of
their portfolio invested in Enron stock. These employees were bearing a high degree of
________ risk.
A) unsystematic
B) systematic
C) market specific
D) non-diversifiable
E) common
Answer: A
Diff: 1 Type: MC
Skill: Conceptual
31
15) Which of the following is a systematic risk?
A) the risk that oil prices rise, increasing production costs
B) the risk that the CEO is killed in a plane crash
C) the risk of a key employee being hired away by a competitor
D) the risk of a product liability lawsuit
E) the risk of an equipment failure
Answer: A
Diff: 1 Type: MC
Skill: Conceptual
16) Which of the following is a diversifiable risk?

A) the risk that oil prices rise, increasing production costs
B) the risk that the economy slows, reducing demand for your firm's products
C) the risk that your new product will not receive regulatory approval
D) the risk that the Bank of Canada raises interest rates
E) the risk that a new government is elected and raises corporate taxes
Answer: C
Diff: 1 Type: MC
Skill: Conceptual
Use the information for the question(s) below.
Consider an economy with two types of firms, S and I. S firms always move together, but I firms
move independently of each other. For both types of firms there is a 70% probability that the
firm will have a 20% return and a 30% probability that the firm will have a -30% return.
17) What is the expected return for an individual firm?

A) 3%
B) 5%
C) 14%
D) -5%
E) 0%
Answer: B
Explanation: expected return = 0.7(20%) + 0.3(-30%) = 5%
Diff: 1 Type: MC
Skill: Analytical
32
18) The standard deviation for the return on an individual firm is closest to:
A) 23.0%
B) 5.25%
C) 15.0%
D) 10.0%
E) 25.0%
Answer: A
standard deviation = = 0.2291
Diff: 2 Type: MC
Skill: Analytical
19) The standard deviation for the return on an portfolio of 20 type S firms is closest to:
A) 15.0%
B) 23.0%
C) 5.25%
D) 5.10%
E) 20.0%
Answer: B
Since all these firms move the same, there is no adjustment to the standard deviation.
Diff: 2 Type: MC
Skill: Analytical
20) The standard deviation for the return on an portfolio of 20 type I firms is closest to:
A) 5.25%
B) 15.0%
C) 5.10%
D) 23.0%
E) 20.0%
Answer: C
Since all these firms move independently,
stdev = stdev(single firm) / = 0.2291 / = 0.0512
Diff: 2 Type: MC
Skill: Analytical
33
21) If the Bank of Canada were to change from an expansionary to contractionary monetary
policy, this would be an example of:
A) unsystematic risk.
B) systematic risk.
C) independent risk.
D) diversification risk.
E) unwanted risk.
Answer: B
Diff: 2 Type: MC
Skill: Analytical
22) Independent risk is more closely related to:

A) unsystematic risk.
B) systematic risk.
C) common risk.
D) diversification risk.
E) unwanted risk.
Answer: A
Diff: 2 Type: MC
Skill: Analytical
23) What is the difference between systematic and unsystematic risk?

Answer: Systematic risk refers to fluctuations of a stock's return that are due to market-wide
news which affects all stocks simultaneously. Unsystematic risk refers to fluctuations of a stock's
return that are due to company or industry-specific news, which are unrelated across stocks.
Diff: 1 Type: SA
Skill: Conceptual
24) How does diversification affect systematic and unsystematic risk?

Answer: Diversification does not affect systematic risk, since all stocks are affected by this type
of risk, and increasing the number of stocks in a portfolio will not eliminate systematic risk.
Volatility declines as the number of firms in a portfolio increases, until eventually diversification
will eliminate unsystematic risk.
Diff: 1 Type: SA
Skill: Conceptual
34
25) Explain why investors do not receive a risk premium for exposure to unsystematic risk.
Answer: Since investors can eliminate unsystematic risk through diversification, any stock that
paid an additional risk premium for unsystematic risk would be bought until the share price rose
sufficiently to eliminate the risk premium.
Diff: 1 Type: SA
Skill: Conceptual
35
Another random document with
no related content on Scribd:
and marching thence from city to city, the chosen Lord of the Netherlands,
more puissant than any King.
IV
On the last day of July, Gilles de Crohin had his forces ready, equipped,
armed, provisioned, at La Fère, where Marguerite de Navarre came herself
in order to wish him and the expedition God speed.
But Monsieur—who had promised, nay sworn, he would come too, in

order to take command in person at the last, when victory was assured—
Monsieur had not arrived.
For two sennights the devoted sister and the faithful friend waited for
him; but he did not come. Marguerite sent courier upon courier after him to
Paris, but he evaded them all, and at one time nobody knew where he had
hidden himself. To his other vices and failings, this descendant of a once
noble race had added the supreme act of a coward. What that final weary
waiting meant for Gilles, not even a veracious chronicler can describe. With
Cambray almost in sight, with the Spanish armies not two leagues away,
with his Jacqueline enduring every horror and every misery which the
aching heart of an absent lover can conjure up before his tortured mind, he
was forced to remain in idleness, eating out his heart in regret, remorse and
longing, doubtful as to what the future might bring, tortured even with the
fear that, mayhap, in Cambray only a flower-covered mound of earth would
mark the spot where his Jacqueline slept the last sleep of eternal rest.
Then at last, upon the fourteenth day of August, a letter came by runner
from Monsieur, for the Queen of Navarre. It had been written in Paris more
than a week ago, and obviously had been purposely delayed. It began with
many protestations of good-will, of love for his sister and of confidence in
his friend. Then the letter went on in a kind of peevish strain:
'I am quite convinced, My dear sister, that I am altogether unfit
for the kind of attack which the present Situation demands. Now
Gilles has a great deal more Energy than I have, and a great deal
more Knowledge. As you know, I never had any longing for
military Glory, and feel absolutely no desire to make a State Entry
into Cambray with a swarm of starved or diseased Flemings
hanging to my stirrup-leathers. Let Gilles to all that. He seems to
have had a liking for that unsavoury Crowd. Then, by and by, if the
Spaniards, in the meanwhile, do not frustrate his Designs by giving
him a beating, I shall be ready to take up once more the negotiations
for my proposed Sovereignty of the Netherlands. But understand,
My dear Sister, that this happy Event must come to pass without the
co-operation of a Flemish bride. Frankly, I have no liking for the
Race, and would be jeopardising My whole Future, by selling
Myself to the first Dutch wench that an untoward Fate would throw
in My way. Entre nous, Elizabeth of England has not been so
haughty with Me of late. Get Me that Kingdom of the Netherlands
by all means, My dear. I verily believe that this accrued Dignity
would ensure the favourable Acceptance of My suit by the English
Queen.'
Marguerite had never made any secret before Gilles of her brother's
perfidy. Even this infamous letter she placed loyally before him now. When
he had finished reading it and she saw the look of measureless contempt
which flashed through his eyes, she could have cried with shame and
misery.
'What to do, Messire?' she exclaimed piteously. 'Oh, my God! what to

do?'
'Relieve Cambray first and foremost, Madame,' he replied firmly. 'After

that, we shall see.'
'But the Flemish lords!' she rejoined. 'Their anger! Their contempt! I
could not bear it, Messire! The shame of it all will kill me!'
'It has got to be borne, Madame! Cambray has suffered enough. It is our
turn now.'
Nor would he discuss the matter any further, even with her. The
expedition had been entrusted to his hands, and nothing would delay him
now. Cambray was waiting and starving, every hour might mean her final
surrender. The Spanish commander—apprised of Monsieur le Duc
d'Anjou's arrival with a strong force—had already offered battle. Gilles was
only too eager to accept the issue.
On the fifteenth day of August, 1581, that battle was fought on the plains
outside Cambray. The issue was never in doubt for one moment. Le
Carpentier asserts that the Duke of Parma, after six hours' stubborn fighting,
surrendered his position and all his forts and retired in great haste in the
direction of Valenciennes.
CHAPTER XXVII
AND THIS IS THE END OF MY STORY
And into the silent desolation of Cambray's deserted streets, there

penetrated once again the sounds of that life which was teeming outside her
walls. From the north and the south, from the east and the west, rumour,
like a wily sprite, flew over the crumbling walls and murmured into ears
that scarcely heard, that the promise given long ago was being redeemed at
last. Anxiety, sorrow and suffering were coming to an end, so the elf
averred. The hero who fought and conquered once, had returned to conquer
again.
Whereupon, those who had enough strength left in them to drag
themselves along, found their way to the ramparts, from whence they could
watch the approach of the man who would bring them liberty if he
succeeded, or bequeath them an heroic death if he failed. There was no
other issue possible. The sands of Cambray's endurance had run down; she
had no more resistance left in her, scarcely the power to suffer any longer. If
the relieving army failed to-day, the setting sun would see the Spanish
soldiery, drunk with victory, swarming over the lonely streets, destroying all
that famine and disease had left whole, all that a dying population had no
longer the strength to defend.
Little could be seen of what went on in the distant plain, and hollow
eyes, wearied with weeping and anxiety, scanned in vain the horizon far
away. But those who had come to watch remained to pray, while their
minds, rendered super-sensitive by bodily want, conjured up visions of that
grim fight which was going on beyond their range of vision.
The history of this heroic people has no more poignant page than that
which tells of this long watch by a crowd of miserable, half-starved people,
the while, out there upon the plain, brave men fought and died for their
sake.
Not only for their sake, but for the honour of France.
II
Once more the roar of artillery and of musketry fills the air with its awe-
inspiring sound. It is early morning, and the sky heavily overcast. To the
anxious watchers, that grim struggle out there is only a dimly-perceived
confusion, a medley of sights and sounds, a clash of arms, the dull thunder
of culverines and sharp report of musketry. And, as the grey light of day
begins to pick out with crude precision the more distant objects, a
kaleidoscope of colour vies in brilliancy with the flash of steel, and tears
asunder the drab mist which lies upon the bosom of the plain.
The yellow and red of the Spaniards becomes easily distinguishable,
then the white and blue and gold of the French, the green of the
arquebusiers, the black of the archers, and even that tiny moving speck,
more brilliant even than the gleam of metal, the white banner of France,
sown with her Fleur de Lys.
But the watchers up on the ramparts vainly strain their hollow eyes to
see the man who has come to save Cambray. They can only guess that he is
there, where the fight is fiercest, where death stands most grim and most
relentless. They have a knowledge of his presence keener than sight can
give, and though voices at this hour are spent and hoarse with pain, yet to
every roar of cannon, to every volley of musketry, there comes, like an
answering murmur, the triumphant call, which now sounds like a prayer and
which their hero taught them four months ago: 'Fleur de Lys and Liberty!'
The French lancers and halberdiers rush the Spanish forts. The
arquebusiers are fighting foot by foot; the musketeers and archers stand
firm—a living wall, which deals death and remains unmoved, despite
furious onslaughts from a foe who appears to be desperate. The plain
around is already strewn with dead.
The French have fought valiantly for close on six hours, have repelled
nine assaults against their positions, and now, at one hour after noon, they
still stand or crouch or kneel on one knee, crossbow in hand or musket, they
fire, fall out, reform and fire again. Shaken, battered, decimated, they still
shoot with coolness and precision, under the eye of one who never tires.
Their ranks are still unbroken, but the Spaniards are giving ground at last.
'This time we are undone!' Parma cries in the excess of his rage.
He himself has been twice wounded; four of his young officers have
been killed. The French musketeers, the finest the world has ever seen,
work relentlessly upon his finest positions. And he feels—this great captain,
who hitherto hath not known defeat—he feels that now at last he has met
his match. Not a great leader like himself, perhaps, not the victorious
general in an hundred fights; but a man whose stubbornness and daring,
whose blind disregard of danger and sublime defiance of evil fortune, gives
strength to the weakest and valour to the least bold.
'I thought you had rid me once of that pestilential rebel!' he exclaims to
de Landas, pointing to where Gilles de Crohin's tall figure towers above the
pressing mass of Spanish halberdiers.
De Landas murmurs an imprecation, crosses himself in an access of

superstitious fear.
'My God!' he says under his breath. 'He hath risen from the dead!'
In truth, Gilles appears endowed at this hour with superhuman strength.

His doublet and jerkin are torn, his breastplate riddled with arrow-shot, he
bleeds profusely from the hand, his face is unrecognizable under a coating
of smoke and grime. Enthusiasm and obstinacy have given him the power
of giants; his hatred of the foe is supreme; his contempt of death sublime.
De Landas sees in him the incarnation of his own retributive destiny. 'Oh,
that God's thunder would smite him where he stands!' he mutters fervently.
''Tis too late now,' retorts Parma, with ferocious spite. 'Too late to call to
God to help you. You should have bargained with the devil four months
ago, when you missed your aim. Risen from the dead, forsooth!' he adds,
purple with fury. 'Very much alive now, meseems, and with the strength of
Satan in his arm.'
He strikes at de Landas with his sword, would have killed him with his
own hand, so enraged is he with the man for his failure to murder an enemy
whom he loathes and fears.
'Unless those cowards rally,' he calls savagely, and points to where, in

the heart of the mêlée, confusion and disorder wield their grisly sceptres,
'we shall have to retreat.'
But de Landas does not stop to hear. The fear of the supernatural which
had for the moment paralysed his thinking faculties, is soon merged in that
boundless hatred which he feels for the rival whom he had thought dead
long ago. In the heart of that confusion he has spied Gilles, fighting,
pursuing; slashing, hitting—intrepid and superb, the centre and the life of
the victorious army. De Landas sets spurs to his horse and, calling to his
own troop of swordsmen to follow, dashes into the mêlée.
The battle now is at its fiercest. A proud army, superior in numbers, in
arms, in knowledge, feels itself weakening before an enemy whose greatest
power is his valour. The retreat has not yet sounded, but the Spanish
captains all know that the humiliating end is in sight. Already their pikemen
have thrown down their cumbersome weapons. Pursued by the French
lancers, they turn and fight with hands and fists, some of them; whilst
others scatter in every direction. The ranks of their archers are broken, and
the fire of their musketeers has become intermittent and weak. Even the
horsemen, the flower of Parma's army, gentlemen all, are breaking in the
centre. With reins loose, stirrup-leathers flapping, swords cast away and
mantles flying loose, they are making a stand which is obviously the last,
and which within the next few minutes will with equal certainty turn into
rout.
Here it is that Gilles is holding his own with a small troop of French
horsemen. His steel bonnet has been knocked off, his wounded arm roughly
bandaged, the sleeves of his jerkin fly behind him like a pair of wings, his
invincible sword strikes and flashes and gleams in the grey afternoon light.
For a few seconds, while the distance between himself and his enemy
grows rapidly less, de Landas sees and hears nothing. The blood is beating
in his temples, with a weird thumping which drowns the din of battle. His
eyes are blinded by a crimson veil; his hand, stiff and convulsed, can
scarcely grasp the pistol. The next instant he is in the very thick of the
turmoil.
'For Spain and Our Lady!' he cries, and empties his pistol into the
seething mass of Spanish horsemen who bar the way twixt him and his
enemy. The horsemen are scattered. Already on the verge of a stampede,
they are scared by this unexpected onslaught from the rear. They fear to be
taken between cross-fires, are seized with panic, turn and flee to right and
left. Two of them fall, hit by that madman's pistol. All is now tumult and a
whirling ferment. The air is thick with smoke and powder, horses,
maddened with terror, snort and struggle and beat the air with their hoofs.
De Landas' own troop join in the mêlée; the French horsemen dash in
pursuit; there is a scrimmage, a stampede; men fight and tear and hit and
slash, for dear life and for safety.
But de Landas does not care, is past caring now. Another disaster more
or less, another scare, final humiliation, what matters? The day is lost
anyhow, and all his own hopes finally dashed to the ground by the relief of
Cambray and the irrevocable loss to him of Jacqueline and her fortune.
Already he has thrown aside his smoking pistol, seized another from the
hand of his nearest follower, and points it straight at Gilles.
'For Spain and Our Lady!'
'Fleur de Lys and Liberty!'
The two cries rang out simultaneously—then the report of de Landas'

pistol, and Gilles' horse hit in the neck, suddenly swerves, rears and paws
the air, and would have thrown its rider had not the latter jumped clean out
of the saddle.
To de Landas' maddened gaze the smoke around appears to be the colour

of blood. Blindly he gropes for another pistol. His henchman is near him,
thrusts a weapon into the young Spaniard's trembling hand. For the fraction
of a second, destiny, waiting, stays her hand. Gilles is free of his struggling
horse, he has his sword in his hand; but de Landas once more points a pistol
straight at him.
'Satan! guide thou my hand this time!' he calls out, in a passion of fury.
Then suddenly a raucous cry rises above the din; there is a double, sharp
report, a loud curse, a final groan of despair and of rage, and de Landas,
struck in the breast by an almost savage blow from a lance, throws up his
arms, falls, first on his knees, then backwards on the soft earth, would have
been buried then and there under a seething mass of struggling men and
beasts, had not Gilles rushed to him with one bound, caught him by the
shoulders and dragged his now lifeless body to comparative shelter a few
paces away. Now Gilles picks up a fallen cloak from the ground and lays it
reverently over his fallen foe.
'Because Jacqueline loved you once,' he murmurs under his breath.

Then he turns to his faithful Jehan. 'You were just in time,' he says
simply.
Jehan has been glancing down with mingled rage and contempt on the
man whom in his loyal heart he hated in life with a wellnigh ferocious
intensity. Now he looks at his master—his friend whom he loves—sees him
on one knee by the side of that abominable murderer, trying to struggle
back to his feet, but evidently weak and dizzy.
With a cry like an enraged tiger, Jehan casts his still streaming lance
away, is already kneeling beside Gilles, supporting him in his arms as
gently as a mother would shelter her child.
'H-h-h-hurt?' he stammers laconically. 'That d-d-d-devil hit you?'
'Only in the thigh,' replies Gilles. 'You diverted his aim right enough, my
dear Jehan! And once more I owe my life to you. Just help me to get up,' he
adds with his wonted impatience. 'Do not let me miss another second of the
glorious spectacle of our victory!'
III
Out in the western sky, a vivid band of blue and gold breaks the bosom
of the clouds. The afternoon sun illumines with its glowing rays the final
rout of the Spanish army. Le Carpentier's laconic words tell us more than
any lengthy chronicle could do.
'The Duke of Parma,' he says curtly, 'abandoned his forts and retired in
haste to Valenciennes.'
So much that was mighty and great and invincible has succumbed before
the power which comes from a sense of justice, from valour and enthusiasm
and the decrees of God. God has decided that Cambray has suffered
enough; He has broken the might of Parma and set an end to the miseries of
an heroic people. And when, like a tidal wave of steel, the Spanish troops
begin to oscillate toward the north, where lies Valenciennes and safety, up
on the ramparts of Cambray hundreds of men and women and children fall
on their knees, and thank God with fervour for their freedom and for
victory.
They are too weak to shout, too weak even to raise their arms. The
pikemen lean upon their arms, the musketeers upon their muskets, the
gunners lie half-exhausted upon their culverines. Of the twenty-five
thousand citizens of Cambray, scarce fifteen thousand have remained to bid
the returning hero welcome.
Up in the fort of Cantimpré, the city guard—what is left of it—wait for

the entry of the victorious army. The bridge is lowered, the men stand as if
on parade. The city fathers are there too, and amongst them stands
Monseigneur the governor.
Gaunt and careworn they all look. Their ranks too have been rudely
thinned. Monseigneur's hair is now snow-white; the hand with which he
leans upon a stick is emaciated almost to the bone. His other arm rests on
that of Jacqueline de Broyart, whose pale, wan face hath a curious air of
mystery and of detachment.
'Here they come!' Monseigneur says at last, as on the horizon far away a
glowing speck begins to move, to gather shape as it draws nearer, catching,
reflecting and throwing back the roseate flashes of the setting sun.
The whole city now is watching; her very soul is in the eyes of her
expectant children. A curious, nervous thrill has taken the place of bodily
exhaustion. Only Jacqueline stands quite silent and impassive. Boundless
gratitude fills her heart for the deliverance of the city; but the overwhelming
joy which she feels is drowned in the immensity of her sorrow. For her, in
truth, life is gone, happiness lies buried beneath the city walls. She can
rejoice at the coming of the man whom the people believe to be their hero,
but for her he is the stranger. The real defender of Cambray—her brave and
spotless knight—gave his precious life for her city all these weary months
ago.
People crowd more insistently round her. The speck on the horizon has
become a moving multitude. Steel and gold flash in the evening light,
banners wave in the gentle, summer breeze. The French army, glorious after
victory, wends its way to the city which it has saved.
In the forefront march the halberdiers, with their blue hose and huge,
unwieldy trunks, small bonnets on their heads and a cloak about their
shoulders. Then the pikemen, in striped doublets, their enormous hats slung
behind their backs, and the musketeers with tall boots which reach half-way
up their thighs. Immediately behind them comes a long train of carts and
waggons—the provisions collected together for the starving city. The
Master of the Camp is in charge of these. He is mounted on a black charger,
surrounded by his staff. The ends of his blue silk scarf are smothered in
dust, as are his boots and his plumed hat. Some way behind the waggons,
the archers come, marching three abreast, and then the foot-soldiers, with
huge steel gauntlets covering their hands, their heavy lances borne upon
their shoulders.
Nearer and nearer the procession comes, and as it approaches, a strange

exultation born of weakness and of fever, rises in the hearts of the watchers.
It seems as if an unendurable weight were lifted from their shoulders, as if
they themselves had in a mysterious manner been dead for weeks and
months, and now had risen again in order to gaze into the setting sun, from
whence their liberator had come to them again.
The streets are no longer deserted now. Furtive forms, gaunt and
haggard, stand under doorways or congregate upon the open places. Women
in ragged kirtles with children clinging to their skirts, sick and maimed and
halt from disease and want, crawl out of the squalid houses to watch the
entry of the French troops. Many, at sight of those brave men all covered
with smoke and powder and dust, fall down on their knees and a long-
forgotten prayer rises to their lips.
Anon down the Bapaume road it is quite easy to perceive the white
banner sown with the gold Fleur de Lys. It is borne by a herald who sits
upon a cream charger, and immediately behind him a man rides alone. He is
hatless; but he holds his head erect and looks straight out towards the city.
He has the reins of his horse in one hand, the other is hidden under his
cloak. Some little way behind him ride a number of cavaliers in brilliant
multi-coloured doublets and hose, with drawn swords in their hands, which
flash and gleam in the setting sun. They are still close on half a league
away, but adown the long, flat road Monseigneur's keen eyes have already
perceived them.
'It is His Highness the Duc d'Anjou!' he exclaims.
But, with a strange instinct which has for ever remained inexplicable,
Messire de Balagny retorts:
'It is the saviour of Cambray!'
And while he goes at once to transmit the governor's orders that all the
church bells in the city shall at once begin to ring, Jacqueline de Broyart's
gaze is fixed upon the road which lies like a winding ribbon down below,
stretching as far as the glowing horizon far away. The sky is suffused with a
joy-blush of crimson and orange and gold, the sinking sun illumines with a
roseate hue that distant group of cavaliers, in the forefront of whom rides
the defender of Cambray.
After the turmoil of battle, an immense silence reigns over the bosom of
the plain. Even the tramp of thousands of men, the clatter of horses' hoofs
and of arms, seem like an integral part of that great and solemn silence,
which has its birth in the stricken city. The victorious army has entered
Cambray, not with music and with cheering, not with shouts of joy. Joy is in
every heart, but an abundance of sorrow has stilled its outward expression.
The plain itself is strewn with dead and wounded; hundreds of valiant lives
have been freely given for the deliverance of Cambray. Those that remain—
some five thousand of them—cross the bridge at the foot of Cantimpré,
marching three abreast. It takes an hour for the first portion of the victorious
army to enter the city. The service men bring provision waggons in plenty,
together with news that more will follow as quickly as may be. By nightfall
there would not be one hungry mouth left in Cambray.
Relief, content, the shadow of happiness, are too poignant to find

expression in words—perhaps they have come just a little too late. But
gratitude is immense. Soon the streets of Cambray are encumbered with
train and equipment, with carts and waggons and barrows, horses loosely
tethered, litters of straw for the wounded and the ailing. The distribution of
the food is the most pressing need. Everywhere men in faded, ragged
clothing, with gaunt faces and hollow eyes, hurry to the Grand' Place and to
the Marche aux Bois, where the food waggons are set up under the eye of
the Master of the Camp.
A pathetic procession of eager, half-starved shadows—women and

children too—with the humble, deprecating air of the desperately indigent,
crowd around the waggons. Fifteen thousand mouths gaping for food. There
is only a very little for everybody at first. More will come to-night. More
again to-morrow. France, who has saved, will also provide. Of order there is
none. People push and scamper as the hungry are wont to do, but all are too
feeble to do one another much harm. The soldiers, flushed with victory, are
patient and good-natured. My God! the very aspect of the streets is enough
to make any staunch heart quake with horror! Some of the men have wife
and family in far-off Artois or Provence. They can hardly restrain their tears
as wee, grimy hands, thin to the bone, are stretched out to them in pitiable
eagerness. They are as lavish as they can be, giving up their own supper to
feed these unfortunates: generous now as they were brave out there, when
they fought under the eye of the staunchest man they had ever seen in
battle.
''Tis a fine candle you folk of Cambray owe to Monseigneur de

Froidmont!' the Master of the Camp says to a group of burghers who, self-
restrained and stoical, are giving help in the distribution, waiting till all the
poor and the ignorant are fed before they themselves receive their share.
'Monseigneur de Froidmont?' one of them exclaims. 'Why, who is he?'
'Who is he?' retorts the Master of the Camp. 'Nay, by the Mass! He is
above all the most doughty knight who hath ever wielded a sword. He it is
who has saved your city for you, my friends. If the Spanish soldiery is not
inside your walls this night, 'tis to him that ye owe it, remember!'
Most of the burghers look gravely puzzled. Their spokesman ventures on

the remark:
'To His Highness the Duc d'Anjou, surely!'

The Master of the Camp shrugs his shoulders.
'That is as it may be,' he says dryly. 'But you might all have rotted inside
your walls but for the valour of Monseigneur de Froidmont.'
'But the Duc d'Anjou...' hazards some one timidly.
'A murrain on the Duc d'Anjou!' breaks in the Master of the Camp good-
humouredly. ''Tis of the defender of your city you should think at this hour.
Ah!' he exclaims, with a sigh of satisfaction, ''tis good to hear that your city
fathers at the least are giving him a rousing welcome!'
He himself sets up a cheer, which is taken up by his soldiers; for just

then the bells of Notre Dame have begun their joyous peal. Soon Ste. Croix
follows suit and St. Géry from the heights toward the north. Peal after peal
resounds, till the whole air vibrates with that most inspiriting sound,
chasing away with its melody the very shadow of silence and desolation.
The last rays of the sun have now sunk in the west. Twilight is slowly
fading into dusk. Out beyond Cantimpré, the herald upon his charger has
halted at the foot of the bridge, the white banner of France, gay with its
golden Fleur de Lys, is gently stirred by the evening breeze. The group of
cavaliers has halted too, while the defender of Cambray rides slowly into
the city.
IV
Monseigneur the governor awaited the victor in the courtyard of the

citadel. He stood in the midst of his Sheriffs and his Provosts and the other
dignitaries of the city, all of them still dignified and imposing, despite the
faded appearance of their clothes and the gaunt, hungry look in their wan
faces. All around the courtyard was lined with troops, the mere remnants of
the garrison who had fought so valorously on that never-to-be-forgotten day
in April, a little over four months ago, and of the small body of French
troops who had come to their assistance then.
Gilles dismounted at the bridge-head, disdaining, despite his wounds, the
aid of his faithful henchman's arm. Only limping very slightly, the bandage
on his hand hidden in the folds of his cloak, he passed in on foot and alone
under the gateway. For the space of one heart-beat he paused just inside the
courtyard, when he saw before him this large concourse of people who, at
his appearance, had slowly dropped on their knees. They were for the most
part faces which had been familiar to him all those months ago—faces
which even now wore an expression of deference and of awed respect.
A bitter sigh rose to Gilles' lips. For him, despite the grandeur of his
victory, this was a bitter hour. Within the next few moments these proud and
brave people would have to be told that a prince of the House of France had
proved himself to be both fickle and base. Messire de Balagny was not
there; and at first he did not see Jacqueline. She had retired into the guard-
room at the desire of her guardians. 'It were seemly,' they had said, 'that we,
your protectors, should first receive His Highness and pay him our respects.
Then he will ask for his future bride, and ours shall be the honour of
bringing you to him!'
So she was not there for the moment, and Gilles felt freer in her absence
—even caught himself hoping that he would not be put to the torture of
seeing her again. It were best for him and best for her that she should not
hear that awful confession from his lips, that a Valois prince had broken his
word to her, and in his wanton infamy had repudiated the perfect gift of
God which had been offered to him.
'Do not tarry one moment, Messire,' Marguerite de Navarre had

entreated of him at the last. 'Take advantage of the moment of boundless
relief and gratitude when your victorious troops enter Cambray to release
Monsieur of his promise to wed the Flemish heiress. Do not enter the city
till you have made it clear to the Flemish lords that the Duc d'Anjou will
accept the Sovereignty of the Netherlands, and in exchange will give the
support of France, of her wealth and of her armies; but that he will not enter
into personal alliance with one of his future subjects.'
So now, when at Gilles' approach the governor and the city fathers all
bent the knee before him, he said at once, directly and simply:
'I entreat you, Messeigneurs, not to kneel to me. That honour belongs by
right only to the puissant Prince whom I represent.'
'Your Highness——' began d'Inchy humbly.
'I am no Highness, Monseigneur,' he rejoined firmly. 'Only the servant of

the Duc d'Anjou, who will be here as soon as may be, to claim from you
that gratitude which you owe to him and not to me.'
D'Inchy and the others did not move. Their limbs were paralysed, their
lips dumb. Their ears refused to convey to their over-tired brains that which
they had just heard. It all seemed like a dream; the gathering dusk made
everything appear unreal—the ringing of the joy-bells, the far-away crowd
of soldiers and cavaliers, who filled the very air with clatter and jingle of
spurs and accoutrements, with creaking of waggons, snorting of horses and
snatches of songs and laughter. And in the centre of the courtyard, this tall
figure of a man, with the tattered doublet and the bleeding hand, and the
voice which seemed as if it rose straight out of a glorious grave.
'Do not look so puzzled, Messeigneurs,' Gilles went on with a smile,

half-sad, wholly good-humoured. 'The Duc d'Anjou will not tarry, my word
on it. He bids me say that he accepts the Sovereignty of the Netherlands,
and will place at the disposal of her people the might and the armies of
France, his own power, wealth and influence.'
Still as in a dream, d'Inchy and the Sheriffs and the Provosts staggered to
their feet. The mystery, in truth, was greater than their enfeebled minds
could grasp. They were for the most part chiefly conscious of a great
feeling of disappointment.
Here stood before them, tall and magnificent even beneath rags and
grime, the man whom they revered above all others, the hero whose
personality was enshrined in the very hearts of the people of Cambray.
What the mystery was which clung round him they did not know, nor did
they care: he was the man of their choice, the saviour of Cambray now, as
he had been their defender in the hour of their gravest peril. The victor of
this glorious day was the hero of the ramparts on that memorable April day,
the man who four months ago had defended them with heart and will and
undaunted courage then, and to whom they owed their freedom, the honour
of their wives and daughters and the future of their race.
To think of him as other than the Duc d'Anjou, their chosen Sovereign
Lord, the husband of Jacqueline de Broyart, was positive pain. Most of
them even now refused to believe, stared at Gilles as if he were a wraith set
to mock them in their weakness and their dependence.
'Not the Duc d'Anjou?' the Chief Magistrate murmured. 'Impossible!'
Gilles could not help but smile at the farcical aspect of his own tragedy.
'It is not only possible, Messeigneurs,' he said, 'but is e'en a positive fact.
Messire de Balagny would soon tell you so: and His Highness the Duc
d'Anjou himself will be here on the morrow to prove to you that I am but an
humble substitute, a representative of His Graciousness.'
'But,' stammered d'Inchy, still in a state of complete bewilderment, 'that

day in April ... your—you, Monseigneur ... in the Town Hall ... Madame
Jacqueline...'
With a quick gesture, Gilles put up his hand.
'I entreat you, Monseigneur,' he said earnestly, 'to wait awhile ere you
probe further into His Highness' secrets. For the moment, will you not be
content to rejoice with me at your deliverance? His Highness accepts from
you the Sovereignty of the Netherlands. To-morrow he will be here, ready
to receive the acclamations and the welcome of his people. He hath proved
himself not only ready, but able, to defend you against all your enemies. He
hath this day gained a signal victory over the powerful armies of the King
of Spain. Henceforth the whole might of France will stand between you and
the relentless foe who threatens your lives and your liberties. Join me,
Messeigneurs,' he concluded earnestly, 'in acclaiming His Highness the Duc
d'Anjou et d'Alençon, prince of the House of France, as your Sovereign
Lord!'
His inspiring words were received in silence. Not one voice was raised
in response to his loyal call. Gilles frowned, feeling that the supreme hour
had come. A moment or two longer, and the inevitable question would be
put 'And what of Madame Jacqueline, Monseigneur? What of the lady
whom His Highness has sworn to wed?'
Already he had steeled himself to give answer, though the answer could
only proclaim dishonour, both for himself and for the Valois prince whom
he was trying so faithfully to serve unto the end. He saw the frown of
puzzlement which gathered on d'Inchy's brow. The governor, in truth, was
the first to recover his presence of mind. Leaning upon his stick, with back
bent, but his whole attitude one of supreme dignity, he came nearer to Gilles
and fixed a stern gaze upon his face.
'If you are not the Duc d'Anjou, Monseigneur,' he said slowly, 'will you
tell us who it was who defended Cambray with such indomitable valour
four months ago? Will you tell us who it is that saved Cambray to-day? For,
of a truth, my friends and I are bewildered, and the mystery before us is one
which we cannot fathom. Therefore I dare ask you once again in all respect
—I may say in all affection: if you are not the Duc d'Anjou, who is it that
stands before me now?'
'The saviour of Cambray!' came in a clear, ringing voice from the further
end of the courtyard. 'My promised Lord and King!'
The sound of Jacqueline's voice sent a spark of living flame through

those minds, atrophied by all this mystery. All eyes were at once turned to
where she stood, dimly outlined in the gathering gloom. She was clad in a
sombre gown and wore a dark veil over her fair hair. Her young, girlish
figure, free from the hideous trammels of hoops or farthingale, appeared
ethereal against the background of grim, frowning walls. Only the last
lingering grey light in the west brought into bold relief her pale face and
graceful shoulders, smooth like ivory. Just for a minute or two she stood
quite still, like an exquisitely graven image, rigidly still yet pulsating with
life. Then she advanced slowly towards Gilles. Her eyes held his and he
scarcely dared to breathe, for fear that perfect vision should vanish into the
skies, whence, of a truth, it must have descended. He could not have uttered
a word then, if his very existence had depended on it. It seemed to him as if
his very heart had stopped in its beating, as if life and time and the whole
universe was stilled while Jacqueline's blue eyes sought his own, and she
came, with hands extended as if in entreaty, to him.
Was it a minute or a cycle of years! He himself could not tell you. He

saw nothing of what went on around; the city walls had fallen away, the
men in their sombre clothes become mere shadows, the very sky overhead
had receded into the realm of nothingness.
And through that state of semi-consciousness, her exquisite voice came

to him as from another world.
'Nay! my dear Lord,' she said, with her enchanting smile, 'you'll not
refuse me the joy of paying something of my country's eternal debt of
gratitude to you.'
He still stood half-dazed and silent. Then suddenly he took her hands
and slowly bent the knee, and buried his battle-stained face in her sweet-
scented palms.
It had all occurred within half a dozen seconds. The governor, the Chief
Magistrate, the city fathers, gazed on uncomprehending, silent and puzzled
at what they saw. After awhile, d'Inchy murmured vaguely:
'Madame Jacqueline ... we ... that is...'
But quickly now she turned and faced them all, while Gilles still knelt
and rested his hot forehead against her cool white hand. Through the gloom
they could just discern her face, white and serene and withal defiant and
firm, and irradiated with an enormous happiness.
'Messeigneurs,' she said with solemn earnestness, 'you heard, two

sennights ago, the profession of faith which I made publicly before the
assembled people of Cambray. There I swore by the living God Who made
me that I would cherish and serve, loyally and faithfully, even until death,
the noble and valorous hero who defended our city in the hour of her
gravest peril. That dauntless hero is before you now. Once again he has
saved our city from destruction, our sisters from dishonour, our men from
shame. To him did I plight my troth, to him alone will I be true!'
Then, as all the men around her remained silent, moved to the depth of
their hearts by the sublime note of passion which rang through her avowal,
she continued, and this time with a note of unswerving defiance and
magnificent challenge in her voice:
'Ask the people of Cambray, Messeigneurs! Let them be the arbiters of

my fate and their own. Ask them to whom they would have me turn now—
to the mighty Prince who would only use me and them and our valiant race
as stepping stones to his own ambition, or to the hero who has offered his
life for us all.'
A low murmur went round the assembly. Grave heads were shaken, toil-
worn hands were raised to wipe a furtive tear. The evening gloom
descended upon this strange scene, upon the reverend seigneurs and the
stolid soldiers, upon the man who was kneeling and the woman—a mere
girl—who stood there, commanding and defiant, secure in her love, proud
of her surrender, ready to fight for her happiness.
'Ask the people of Cambray, Messeigneurs,' she reiterated boldly, 'if you
have a doubt!'
She let her eyes wander slowly over the crowd. One by one, she looked
these grave seigneurs in the face, these men who arrogated the right to rule
over her destiny. They were her friends, had been her daily companions in
the past four months of horror and of misery. They had trembled with her
over Cambray's danger, had wept with her over Cambray's woes. With her
they had acclaimed the hero who had defended them, had wept when they
saw him fall; and to-day, again to-day, had been ready to deify him as their
hero and her knight.
'Messeigneurs,' she pleaded, 'ask the people of Cambray.'
She knew what would be the people's answer. Now that the hour of their
liberty had struck, now that the Spaniard no longer thundered at their gates,
they were ready to carry their Liberator shoulder-high and give him the
universe in their gratitude, if they had it to give. What cared they if their
Liberator was a Duc d'Anjou or a nameless knight? He was the man whom
they worshipped, the man who had made them free.

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10.1 A First Look at Risk and Return

3) Stocks with high returns are expected to have:

9) Why must riskier investments offer higher expected returns?

10.2 Historical Risks and Returns of Stocks

E) Rannual = (1 + R1)(1 + R2)(1 + R3)(1 + R4) + 1

Use the table for the question(s) below.

Date Price ($) Dividend ($)

Consider the following realized annual returns:

S&P 500 IBM

10.3 The Historical Tradeoff between Risk and Return

7) Which of the following statements is TRUE?

10.4 Common Versus Independent Risk

Use the information for the question(s) below.

4) What is the expected payoff for Big Cure's Blockbuster drug?

5) What is the expected payoff for Little Cure's ten drugs?

3) Investors should earn a risk premium for bearing unsystematic risk.

5) In general, it is possible to eliminate ________ risk by holding a large portfolio of assets.

Consider the following average annual returns:

9) What is the risk premium for the portfolio of small stocks?

11) What is the risk premium for corporate bonds?

16) Which of the following is a diversifiable risk?

Use the information for the question(s) below.

17) What is the expected return for an individual firm?

22) Independent risk is more closely related to:

23) What is the difference between systematic and unsystematic risk?

24) How does diversification affect systematic and unsystematic risk?

But Monsieur—who had promised, nay sworn, he would come too, in

'What to do, Messire?' she exclaimed piteously. 'Oh, my God! what to

'Relieve Cambray first and foremost, Madame,' he replied firmly. 'After

AND THIS IS THE END OF MY STORY

And into the silent desolation of Cambray's deserted streets, there

De Landas murmurs an imprecation, crosses himself in an access of

In truth, Gilles appears endowed at this hour with superhuman strength.

'Unless those cowards rally,' he calls savagely, and points to where, in

'For Spain and Our Lady!'

'Fleur de Lys and Liberty!'

The two cries rang out simultaneously—then the report of de Landas'

To de Landas' maddened gaze the smoke around appears to be the colour

'Because Jacqueline loved you once,' he murmurs under his breath.

'H-h-h-hurt?' he stammers laconically. 'That d-d-d-devil hit you?'

Up in the fort of Cantimpré, the city guard—what is left of it—wait for

Nearer and nearer the procession comes, and as it approaches, a strange

'It is His Highness the Duc d'Anjou!' he exclaims.

'It is the saviour of Cambray!'

Relief, content, the shadow of happiness, are too poignant to find

A pathetic procession of eager, half-starved shadows—women and

''Tis a fine candle you folk of Cambray owe to Monseigneur de

'Monseigneur de Froidmont?' one of them exclaims. 'Why, who is he?'