You Have a Portfolio Which Has an Average Return of 10.3

question 56

Multiple Choice

You have a portfolio which has an average return of 10.3%. In any given year, you have a 2.5% probability of earning either a zero or a negative annual return. What is the approximate standard deviation of your portfolio?
$\begin{array}{cr}\text { Probability } & \text { "z" value } \\\text { of loss } & \\1.0\% & 2.326 \\2.5 & 1.960 \\5.0 & 1.645\end{array}$

• A)5.26%
• B)6.43%
• C)6.94%
• D)7.60%
• E)8.14%

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Definitions:

Normal Balance

The aspect of an account, be it on the debit or credit side, designated for recording increments to the account.

Credit

An accounting entry that increases a liability or equity account, or decreases an asset or expense account.

Adjusting Entry

An entry made in the accounts to reflect a correct amount of revenues and expenses for a specific period before preparing the financial statements.

Consulting Fees-Revenue

Income earned by an individual or a company for providing professional advice or services to clients.