The Performance of the Common Stock of Creekside Stores Is

question 304

Multiple Choice

The performance of the common stock of Creekside Stores is highly dependent upon the state of the economy. In a boom economy, the stock is expected to return 24% in comparison to 11% in a normal economy and a negative 18% in a recessionary period. The probability of a recession is 10%. There is a 20% chance of a boom economy. The remainder of the time the economy will be at normal levels. What is the standard deviation of the returns on Creekside stock?

• A) 10.68%
• B) 10.85%
• C) 11.13%
• D) 11.22%
• E) 11.28%

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Definitions:

Office Space

Refers to the premises where commercial and administrative work is conducted, often leased or bought by businesses.

Employees

Individuals hired by a business or organization to perform specific duties in exchange for compensation.

Rent

A periodic fee paid for the use of property or land.

Opportunity Cost

The foregone benefit that would have been derived from an option not chosen.