The Expected Rate of Return and Standard Deviations, Respectively for Four

question 74

Multiple Choice

The expected rate of return and standard deviations, respectively for four stocks are given below:
$\begin{array}{ll}\mathrm{ABC} & 9 \%, 3 \% \\\mathrm{CDE} & 11 \%, 9 \% \\\mathrm{FGH} & 12 \%, 8 \% \\\text { IJK } & 14 \%, 10 \%\end{array}$
Which investment offers the lowest expected return relative to its standard deviation?

• A) ABC
• B) CDE
• C) FGH
• D) IJK

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Definitions:

Work in Process

Goods in various stages of completion throughout the plant, not including raw materials or finished products.

Finished Goods Inventory

The direct materials costs, direct labor costs, and factory overhead costs of finished products that have not been sold.

Manufacturing Business

A type of business that uses components, parts, or raw materials to make a finished good or product.

Job Order Cost System

An accounting method used to accumulate costs for each individual job or project, providing detailed cost tracking.