A Firm Has Set a Budget Constraint of $200,000 on New

question 103

Multiple Choice

A firm has set a budget constraint of $200,000 on new investments, which cannot be exceeded.Given the following independent investments, what is the loss to the firm from the capital rationing constraint?

• A)$15,738
• B)$17,762
• C)$20,500
• D)$31,500

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Definitions:

Standard Deviation

A means of gauging the extent of distribution or variation within a group of data.

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Standard Normal Distribution

The standard normal distribution is a normal distribution with a mean of 0 and a standard deviation of 1, used in hypothesis testing and probability determination.

Normal Random Variable

A variable that follows a normal distribution, characterized by its bell-shaped curve, where the mean, median, and mode are all equal.