What Is the Variance of the Expected Returns on This

question 34

Multiple Choice

What is the variance of the expected returns on this stock?
$\begin{array}{lcr}\text { State of the Economy } & \text { Probability } & E(R) \\\text { Boom } & .25 & 15 \% \\\text { Normal } & .75 & 8 \%\end{array}$

• A)5.25
• B)5.79
• C)6.25
• D)9.19
• E)10.50

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Definitions:

Manufacturing Costs

Manufacturing costs encompass all expenses directly involved in the production of goods, including materials, labor, and overhead.

Markup

The difference between the cost of a product and its selling price, expressed as a percentage over cost.

Fixed Expenses

Regular and unchanged expenses incurred by a business irrespective of its level of output or sales volume, such as lease payments, insurance, and salaries of permanent employees.

Theory of Constraints

A management paradigm that focuses on identifying and addressing the single bottleneck or constraint that severely limits a system's performance or output.