The Return Expected from a Risky Investment Is 24%, and the Standard

question 51

Multiple Choice

The return expected from a risky investment is 24%, and the standard deviation of this return is 17%. If returns from this investment are normally distributed, what is the probability that the investment may earn a negative rate of return? (Note: Table V is required to work this problem.)

• A) 8.33%
• B) 7.93%
• C) 6.88%
• D) 5.44%

---

Definitions:

Total Investment

The sum of all expenditures on physical assets, financial assets, and other types of investments within a specified period.

Expected Rate of Return

The anticipated percentage of gain or loss that an investment is projected to generate over a specified period, accounting for all known risks.

Total Investment

The sum of all expenditures on capital assets, such as buildings, equipment, and inventories, over a specific period.

Investment Spending

Expenditures on capital goods used to increase productive capacity or efficiency, including factories, machinery, and technology.