What Is the Standard Deviation of the Returns on a Share

question 42

Multiple Choice

What is the standard deviation of the returns on a share given the following information? $\begin{array} { | l | l | l | } \hline \text { State of Economy } & \text { Probability of State of Economy } & \text { Rate of Return if State Occurs } \\\hline \text { Boom } & 10 \% & 16 \% \\\hline \text { Normal } & 60 \% & 11 \% \\\hline \text { Recession } & 30 \% & - 8 \%\end{array}$

• A)5.80%
• B)7.34%
• C)8.38%
• D)9.15%
• E)9.87%

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Definitions:

Figure From Ground

The perceptual ability to distinguish an object (figure) from its surroundings (ground) based on visual cues.

Perceptual Process

The sequence of steps by which sensory information is organized and interpreted to produce a meaningful experience of the world.

Top-Down Processing

Cognitive processing that begins with the formulation of thought or perception, influenced by expectations and prior knowledge, guiding lower-level processes.

Context Effects

How the context or environment in which information is presented can influence an individual's perception, comprehension, or memory of that information.