A Small Computing Center Has Found That the Number of Jobs

question 165

Multiple Choice

A small computing center has found that the number of jobs submitted per day to its computers has a distribution that is approximately mound-shaped and symmetric, with a mean of 85 jobs and a standard deviation of 5. Where do we expect approximately 95% of the distribution to fall?

• A) between 70 and 100 jobs per day
• B) between 75 and 95 jobs per day
• C) between 95 and 100 jobs per day
• D) between 80 and 90 jobs per day

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Definitions:

Market Risk Premium

The Market Risk Premium refers to the additional return an investor expects from holding a risky market portfolio instead of risk-free assets. It represents the compensation investors demand for taking on higher risk.

Cost of New Equity

The cost of obtaining additional funding through the issuance of new equity, considering underwriting fees and other issuance costs.

Retained Earnings

The portion of net income that is retained by the corporation rather than distributed to its owners as dividends.

Target Capital Structure

The relative amount of debt, preferred stock, and common equity that the firm desires. The weighted average cost of capital should be based on these target weights.