If the Standard Deviation of the Annual Returns (σ )

question 55

Multiple Choice

If the standard deviation of the annual returns (σ ) on the asset is 40%, and the time interval is a year, then the upside change is equal to:

• A) 88.2%
• B) 8.7%
• C) 63.2%
• D) 49.18%

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Definitions:

Multiplier Size

A measure of the impact of fiscal and monetary policies on the national income, showing how initial spending leads to increased total spending.

Fiscal Policy

Government policies regarding taxation and spending that are used to influence economic conditions, including stimulating or restraining economic growth.

Potential GDP

The highest level of Gross Domestic Product (GDP) an economy can sustain over a long period without increasing inflation, reflecting its full employment output.

Inflation

A widespread rise in prices and a decrease in the value of money.