Consider the Following Probability Distribution for Stocks a and B

question 3

Multiple Choice

Consider the following probability distribution for stocks A and B: The standard deviations of stocks A and B are _____ and _____, respectively.

• A)1.5%; 1.9%
• B)2.5%; 1.1%
• C)3.2%; 2.0%
• D)1.5%; 1.1%

---

Definitions:

Lump Sum

A single payment made at a particular time, as opposed to a series of periodic payments.

Lump Sum Payment

A single, one-time payment made for a purchase or to settle a debt, as opposed to installments.

Annuity Due

A type of annuity in which payments are made at the beginning of each period, rather than at the end.

Present Value

The present worth of a sum of money or a series of cash flows expected in the future, assuming a certain rate of return.