What Would Be the Standard Deviation for a $1,000 Risk-Free

question 30

Essay

What would be the standard deviation for a $1,000 risk-free asset that returns $1,100?

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Definitions:

Break-even Point

The level of sales at which total revenues equal total costs, resulting in no profit or loss.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business, such as rent, salaries, and insurance.

Margin of Safety

The difference between actual sales and the break-even point, which measures the cushion that a business has to withstand a sales downturn.

Sales Revenue

The total amount of money generated from sales of goods or services before any expenses are subtracted.