Tara Owns a Shoe Store and a Bookstore

question 46

Multiple Choice

Tara owns a shoe store and a bookstore. Both businesses are operated in a mall. She also owns a restaurant across the street and a jewelry store several blocks away.

• A) All four businesses can be treated as a single activity if Tara elects to do so.
• B) Only the shoe store and bookstore can be treated as a single activity, the restaurant must be treated as a separate activity, and the jewelry store must be treated as a separate activity.
• C) The shoe store, bookstore, and restaurant can be treated as a single activity, and the jewelry store must be treated as a separate activity.
• D) All four businesses must be treated as separate activities.
• E) None of the above.

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Definitions:

Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion of a set of values, often used in finance to assess the volatility of an investment.

Certainty Equivalent Rate

The certain return providing the same utility as a risky portfolio.

Risk-Free Investment

An investment that is expected to return its original investment value without any loss.

Mean-Variance Criterion

The mean-variance criterion is a method for selecting investments that balance expected return against portfolio variance or risk.