For a Potential Investment of $5,000,a Portfolio Has an EMV

question 46

Multiple Choice

For a potential investment of $5,000,a portfolio has an EMV of $1,000 and a standard deviation of $100.What is the rate of return?

• A)5%
• B)10%
• C)20%
• D)50%

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Definitions:

Contingent Liability

A potential obligation that may arise depending on the outcome of a future event or set of circumstances.

Deferred Tax Liability

This is a tax obligation due in the future for income already recorded in the financial statements, resulting from temporary differences between accounting and tax treatments.

Goodwill

The excess amount paid over the fair value of net assets acquired in a business combination, representing intangible assets such as brand reputation or customer relationships.

Future Costs

Expenses that are expected to be incurred in the future, which can include operational expenses, capital expenditure, or other financial liabilities.