What Is the Variance of the Returns on a Security

question 7

Multiple Choice

What is the variance of the returns on a security given the following information?
$\begin{array}{lrr}\text { state of the Economy}&\text { Probabllity}&\text { Rate of}\\&\text {of State of Economy}&\text {Return if}\\&&\text {State Occurs}\\\text { Boom } & .20 & 16 \% \\\text { Normal } & .50 & 8 \% \\\text { Recession } & .30 & -8 \%\end{array}$

• A)79.36%
• B)83.35%
• C)87.73%
• D)89.23%
• E)90.98%

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Definitions:

Retail Method

An estimating method used to calculate inventory cost, based on the retail price, to determine cost of goods sold and ending inventory.

Inventory Estimating

A method used to approximate the amount of inventory a business has without doing a detailed physical count, often applied in periodic inventory systems.

Merchandise Prices

The set prices at which goods are sold to consumers, influencing revenue, profit margins, and competitive positioning.

Inventory Turnover

A financial ratio indicating the number of times a company's inventory is sold and replaced over a specific period.