The Investment Portfolio of a Large Insurance Company Has the Following

question 5

Multiple Choice

The investment portfolio of a large insurance company has the following three equally likely outcomes: 6%, 18%, and 33%. Calculate the expected return and the standard deviation of the
Rate of return for this portfolio. Round your answers to the nearest tenth of a percent.

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Definitions:

Acquisition

The process by which one company takes over another company either by purchasing its assets or its stock.

Goodwill

An intangible asset representing the excess of acquisition cost over the fair value of identifiable net assets acquired in a business combination.

Acquiring Company

A company that purchases most or all of another company's shares to gain control of that company.

Goodwill

An intangible asset that arises when a business is acquired for more than the fair value of its tangible and identifiable intangible assets.