Assume That the Average Annual Historical Return for Shares That

question 73

Multiple Choice

Assume that the average annual historical return for shares that comprise the Australian All Ordinaries index is 10%, and the standard deviation of returns is 20%. Based on these numbers, what is a 95% prediction interval for 2012 returns?

• A) -30%,40%
• B) -20%,40%
• C) -30%, 50%
• D) -15%,25%

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Definitions:

Rational Personal Choice

The decision-making process by individuals that results in the optimal level of benefit or utility for the individual, based on personal preferences and available information.

Personal Benefit

The advantage or gain that an individual receives from making a decision or undertaking an action.

Public Choice Theory

An economic theory that studies how public decisions are made and how public policies are shaped, considering individuals as self-interested agents.

Political Candidate

An individual who offers themselves for public office by participating in electoral campaigns to win an election.