A Stock Has an Expected Rate of Return of 13

question 9

Multiple Choice

A stock has an expected rate of return of 13.9 percent and a standard deviation of 23.3 percent.Which one of the following best describes the probability that this stock will lose more than 1/3 of its value in any one year?

• A)Less than 0.1%
• B)Approximately 2.25%
• C)Approximately 1.13%
• D)Less than 0.26%
• E)Approximately 4.66%

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Definitions:

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts.

Contra Asset Account

An account that is used to reduce the balance of a related asset account to reflect its adjusted carrying value.

Credit Balance

The amount that a company or individual owes to creditors; in accounting, it indicates a balance on the right side of a ledger for liability, revenue, or equity accounts.