Compute the Standard Deviation Given These Four Economic States, Their

question 112

Multiple Choice

Compute the standard deviation given these four economic states, their likelihoods, and the potential returns:
$$\begin{array} { l c r } \text { Economic State } & \text { Probability } & \text { Retum } \\\text { Fast Growth } & 0.35 & 40 \% \\\text { Slow Growth } & 0.45 & 10 \% \\\text { Recession } & 0.10 & - 10 \% \\\text { Depression } & 0.10 & - 100 \%\end{array}$$

• A) 7.5 percent
• B) 12.65 percent
• C) 39.48 percent
• D) 113.69 percent

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Definitions:

Accounts Receivable

Money owed to a business by its customers for goods or services that have been delivered but not yet paid for.

Accounts Payable

Liabilities of a firm that are due to be paid to creditors within a short period of time, usually within a year.

Net Income

The total revenue minus total expenses, indicating the profit made by a business over a period.

Net Cash Flow

The difference between cash inflows and outflows from operational, investing, and financing activities during a specific period.