You Have Been Given This Probability Distribution for the Holding-Period

question 16

Multiple Choice

You have been given this probability distribution for the holding-period return for a stock: What is the expected standard deviation for the stock

• A)2.07%
• B)9.96%
• C)7.04%
• D)1.44%
• E)None of the options

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Definitions:

Conservatism

In accounting, it is the principle of recognizing expenses and liabilities as soon as possible when there is uncertainty about the outcome, but only recognizing revenues when they are assured of being received.

Put-call Ratio

A metric used to measure market sentiment by dividing the number of traded put options by the number of traded call options.

Breadth

The extent to which movements in the broad market index are reflected widely in movements of individual stock prices.

Confidence Index

Ratio of the yield on top-rated corporate bonds to the yield on intermediate-grade bonds.