Consider an Investment with the Following Payoffs and Probabilities $\sigma$ = $\surd$

question 3

Multiple Choice

Consider an investment with the following payoffs and probabilities:
Let the expected value in this example be 1,300.How do we find the standard deviation of the investment?

• A) \(\sigma\) = \(\surd\) { (1000-1300)² + (2000-1300)² }
• B) \(\sigma\) = \(\surd\) { (1000-1300)+ (2000-1300)}
• C) \(\sigma\)= \(\surd\) { (.5)(1000-1300)² + (.5)(2000-1300)² }
• D) \(\sigma\)= \(\surd\) { (.7)(1000-1300)+ (.3)(2000-1300)}
• E)\(\sigma\)= \(\surd\) { (.7)(1000-1300)² + (.3)(2000-1300)² }

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Definitions:

Supplies Expense

The cost associated with the consumption of supplies used in the operations of a business during an accounting period.

Equipment

Fixed assets used in operations, such as machinery, computers, and furniture, which have a useful life of more than one accounting period.

Adjusting Entries

Adjusting entries are journal entries made at the end of an accounting period to update account balances before preparing financial statements, aligning them with the accrual basis of accounting.

Current Assets

Holdings that are projected to be liquidated, traded, or used up within twelve months or over the course of the operating cycle, depending on which timeframe is more extended.