The Expected Rate of Return for the Coming Year on FTC

question 97

Multiple Choice

The expected rate of return for the coming year on FTC common stock is normally distributed with a mean of 14% and a standard deviation of 7%. Determine the probability of earning more than 21% on FTC common stock. (Note: Table V is required to work this problem.)

• A) 1.00
• B) 0.8413
• C) 0.0013
• D) 0.1587

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Definitions:

Equity Mutual Funds

Investment funds that pool money from various investors to purchase a diversified portfolio of stocks.

Fixed-Income Securities

Investments that provide regular income payments, such as bonds or treasury bills, with predetermined interest rates.

Money Market Securities

These are short-term debt instruments, typically with maturities of less than one year, used by governments, financial institutions, and corporations to finance their short-term cash needs.

Net Asset Value

The value of an entity's assets minus the value of its liabilities, often used in the context of mutual and exchange-traded funds.