A Bond Has an Average Return of 11

question 4

Multiple Choice

A bond has an average return of 11.2 percent and a standard deviation of 14.6 percent.What range of returns would you expect to see 68 percent of the time on this security?

• A)-18 percent to 43.9 percent
• B)-18 percent to 40.1 percent
• C)-3.4 percent to 27.8 percent
• D)-3.4 percent to 25.8 percent
• E)-2.5 percent to 13.9 percent

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Definitions:

COGS

Cost of Goods Sold, which refers to the direct costs attributable to the production of the goods sold by a company.

Economic Value Added

A measure of a company's financial performance based on the premise that true profit occurs when additional wealth is created for shareholders, beyond the cost of capital invested.

Cost of Capital

The rate of return a company must earn on its investments to maintain its market value and attract funds.

Use of Leverage

The practice of using borrowed money to increase the potential return of an investment, which also increases the risk of loss.