Which of the Following Statements Is True

question 22

Multiple Choice

Which of the following statements is true?

• A) Calculus of variations (CV) adjusts standard deviations to compare the risk of securities with different expected returns.
• B) Risk-averse investors prefer securities with high standard deviations.
• C) An increase in risk will result in an increase in the standard deviation.
• D) Standard deviations can be computed for stock returns, but not for bond yields.
• E) If the returns from a security are normally distributed, 86% of the observations fall within one standard deviation of the expected value.

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Definitions:

Most Recent Costs

The latest costs incurred in acquiring or producing goods and services, often used in inventory valuation and costing methods.

Cost of Merchandise Sold

The direct costs tied to the production of goods sold by a company, including the cost of the materials and labor.

Ending Inventory

Ending inventory is the total value of goods available for sale at the end of an accounting period, calculated as beginning inventory plus purchases minus cost of goods sold.

Oldest Purchases

This refers to the oldest inventory items purchased first, often related to the first-in, first-out (FIFO) inventory management method.