Consider the Following Discrete Probability Distributions of Payoffs for 3

question 58

Multiple Choice

Consider the following discrete probability distributions of payoffs for 3 securities that are held in a DI's trading portfolio (payoff amounts shown are in $millions) : What are the expected returns for securities Alpha and Beta, respectively (in millions) ?

• A)-$248 and + 248
• B)+$248 and +$248
• C)-$300 and +$400
• D)+$300 and - $3,300
• E)none of these

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Definitions:

Selling Costs

All costs that are incurred to secure customer orders and get the finished product or service into the hands of the customer.

Indirect Costs

Costs that are not directly traceable to a single product or operation, such as overhead.

Opportunity Costs

The potential benefit missed out on when choosing one alternative over another.

Conversion Cost

Conversion cost is the sum of direct labor and manufacturing overhead costs incurred to convert raw materials into finished goods.