Rogue Recreation,Inc

question 33

Multiple Choice

Rogue Recreation,Inc.has normally distributed returns with an expected return of 15% and a standard deviation of 5%,while Lake Tours,Inc.has normally distributed returns with an expected return of 15% and a standard deviation of 15%.Which of the following is true?

• A) Lake Tours' investors are not being adequately compensated for relevant risk.
• B) Rogue Rec is likely to experience returns larger than those of Lake Tours.
• C) Lake Tours is more likely to have negative returns than Rogue Rec.
• D) Rational investors will prefer Lake Tours, Inc. over Rogue Recreation, Inc.

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Definitions:

RRSP

Registered Retirement Savings Plan, a tax-deferred savings account in Canada that allows individuals to save for retirement while potentially reducing their taxable income.

RRIF

Registered Retirement Income Fund, a tax-deferred retirement plan in Canada that an individual can use to generate income from the assets inside their Registered Retirement Savings Plan.

Compounded Annually

Interest calculated once a year on both the initial principal and the accumulated interest from previous periods.

Compounded Monthly

Interest on an investment or loan calculated and added to the principal balance monthly, where each month's interest calculation includes the previous month's interest.