The Returns on the Common Stock of Cycles, Inc

question 261

Multiple Choice

The returns on the common stock of Cycles, Inc. are quite cyclical. In a boom economy, the stock is expected to return 27% in comparison to 13% in a normal economy and a negative 20% in a
Recessionary period. The probability of a recession is 30% while the probability of a boom is 5%.
The remainder of the time the economy will be at normal levels. What is the standard deviation of
The returns on this stock?

• A) 11.40%
• B) 14.79%
• C) 15.87%
• D) 18.27%
• E) 22.46%

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Definitions:

Antitrust Laws

Legislation aimed at promoting competition within markets by regulating anti-competitive practices, monopolies, and mergers that could restrict trade.

Structuralists

Theorists who believe that human culture and society are heavily influenced by underlying structures, often in fields such as anthropology, sociology, and linguistics.

Sherman Act

An antitrust law enacted in 1890 to combat anti-competitive practices, reduce market monopolies, and preserve economic competition.

Vertical Merger

The merger of one or more firms engaged in different stages of the production of a particular final good.