What Is the Standard Deviation of the Returns on This

question 1

Multiple Choice

What is the standard deviation of the returns on this stock?
$$\begin{array} { l c c } \text { State of the Economy } & \text { Erobability } & E ( R ) \\\text { Boom } & .30 & 7.5\% \\\text { Normal } & .70 & 21.0\%\end{array}$$

• A)3.33%
• B)4.62%
• C)5.01%
• D)5.77%
• E)6.19%

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Definitions:

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting its consumption or loss of value over time.

Straight-line Method

A depreciation method that allocates an equal amount of the asset's cost to each accounting period over its expected useful life.

Book Value

The net value of a company's assets as recorded on the balance sheet, deducting liabilities, indicating the shareholder equity.

Residual Value

The projected worth of an asset upon reaching the conclusion of its service period.