The two major steps in preparing for a sales presentation are a. prospecting and practicing. b. advertising and practicing. c. exhibits and prospecting. d. publicity and prospecting.

The two steps in this type of presentation are prospecting and practicing. Prospecting is when one locates and qualifies individuals or businesses that might want to buy a product. The person or business is called a lead. Practicing involves trying out the sales pitch and ways that might promote the product. This includes going over the presentation prior to giving the final presentation so that one gets everything right.

a. Arithmetic average returns for large company stocks:

= (0.0389 + 0.1414 + 0.1913 - 0.1455 - 0.3204 + 0.3737) / 6

= 4.66%

Arithmetic average returns for T-bills:

= (0.0581 + 0.0247 + 0.0370 + 0.0713 + 0.0518 + 0.0616) / 6

= 0.05075

= 5.08%

b. First find variance.

Variance of large company stock:

Variance is divided by n - 1

= {(0.0389 - 0.0466)² + (0.1414 - 0.0466)² + (0.1913 - 0.0466)² + (-0.1455 - 0.0466)² + (-0.3204 - 0.0466)² + (0.3737 - 0.0466)²} / 5

= 0.0617140

Standard deviation = √0.0617140

= 24.84%

Variance of T-bills

= {(0.0581 - 0.0508)² + (0.0247 - 0.0508)² + (0.0370 - 0.0508)² + (0.0713 - 0.0508)² + (0.0518 - 0.0508)² + (0.0616 - 0.0508)²} / 5

= 0.0002926

Standard deviation = √0.0002926

= 1.71%

c. Risk Premiums:

Year 1                                        Year 2                                      Year 3

= 3.89% - 5.81%                        =  14.14% - 2.47%                     = 19.13% - 3.70%

= -1.92%                                    = 11.67%                                    = 15.43%

 

Year 4                                        Year 5                                      Year 6

= -14.55% - 7.13%                       = -32.04% - 5.18%                  =37.37% - 6.16%

= -21.68%                                  = -37.22%                                = 31.21%

Average risk premium:

= (-0.0192 + 0.1167 + 0.1543 - 0.2168 - 0.3722 + 0.3121) / 6

= -0.42%