1. A law to “keep the money in the community” is proposed that would require banks to make 75% of their loans within their own geographic community. What dangers would such a law pose for the financial health of local banks?
2. XYZ stock price and dividend history are as follows:
Year Beginning-of-year Price Dividend paid at Year-End
2010 $100 $4
2011 $110 $4
2012 $90 $4
2013 $95 $4
Compute the standard deviation of stock return.