A Stock Has a Standard Deviation of Daily Returns of 3

question 31

Multiple Choice

A stock has a standard deviation of daily returns of 3 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 .1 percent. The lower boundary is

• A)- 1.65 percent.
• B)- 3.00 percent
• C)- 4.85 percent.
• D)- 5.05 percent.

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Definitions:

Lost Profits

Refers to the income that a business could have earned but was unable to due to some form of disruption or another party's actions.

Misrepresentation

A false statement of fact made by one party to another, which has the effect of inducing that party into a contract.

Law of Restitution

A legal principle aimed at preventing unjust enrichment, requiring a party to return goods or compensation to another from whom they were unjustly received.

Contract Law

A body of law regulating the formation, performance, and enforcement of contracts between parties.