A Stock Has a Standard Deviation of Daily Returns of 1

question 30

Multiple Choice

A stock has a standard deviation of daily returns of 1 percent. It wants to determine the lower boundary of its probability distribution of returns, based on 1.65 standard deviations from the expected outcome. The stock's expected daily return is .2 percent. The lower boundary is

• A)- 1.45 percent.
• B)- 1.85 percent
• C)0 percent.
• D)- 1.65 percent.

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Definitions:

Share

An individual portion of ownership in a company or financial asset.

Distinguish

To recognize or treat someone or something as different from others based on specific characteristics or features.

Broadly Held Corporation

A corporation with a large number of shareholders, distributing ownership across a wide array of investors.

Closely Held Corporation

A type of corporation that has a limited number of shareholders and does not offer its shares for sale to the general public, often family-owned or controlled by a small group of investors.