Assume the Returns from an Asset Are Normally Distributed

question 52

Multiple Choice

Assume the returns from an asset are normally distributed. The average annual return for the asset is 17.4 percent and the standard deviation of the returns is 27.5 percent. What is the approximate probability that your money will double in value in a single year?

• A) Close to .5 percent
• B) Close to 1 percent
• C) Less than 2.5 percent but greater than 1 percent
• D) Less than 5 percent but greater than 2.5 percent
• E) Less than 10 percent but greater than 5 percent

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Definitions:

Direct Manufacturing Cost

Expenses directly associated with the production of goods, including raw materials and direct labor costs.

Units Produced

The total number of complete items manufactured during a specific period.

Period Costs

Period costs are expenses that are not directly tied to the production process and are expensed in the period they occur, such as selling, general, and administrative expenses.

Financial Reporting

The process by which a company communicates its past financial performance, current financial position, and future financial expectations to internal and external stakeholders.