What Is the Approximate Standard Deviation of Returns for a One-Year

question 71

Multiple Choice

What is the approximate standard deviation of returns for a one-year project that is equally likely to return 100 percent as it is to provide a 100 percent loss?

• A)0 percent
• B)50 percent
• C)71 percent
• D)100 percent

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Definitions:

Long-run Equilibrium

A state in which supply equals demand and all factors of production and markets are in balance, typically considered in the context of perfect competition.

Purely Competitive

A market scenario where products are identical, leading to numerous sellers and buyers where no single entity can influence market prices.

Marginal Cost

The cost of producing one additional unit of a product or service, crucial for decision-making about production levels and pricing.

Opportunity Cost

The cost of foregone alternatives when one choice is made over another, representing the benefits that could have been gained by choosing the next best alternative.