A Stock Has an Annual Standard Deviation of 14

question 63

Multiple Choice

A stock has an annual standard deviation of 14.1% and an expected annual return of 11.5%. What is the smallest expected loss for the next 6 months given a probability of 2.5%?

• A)8.90%
• B)13.79%
• C)14.57%
• D)15.38%
• E)16.67%

---

Definitions:

Deferral Method

An accounting practice that involves postponing the recognition of revenue or expenses until a future date.

Restricted Fund Method

An accounting practice for nonprofit organizations, segregating funds according to restrictions imposed by donors.

Deferral Method

A method of accounting that allows for income or expenses to be recognized at a later date rather than when they are initially incurred.

Donated Land

This informs the recording of land gifted to an entity, valued at its fair market value at the time of donation as an asset on the balance sheet.