A $500 Investment Has the Following Payoff Frequency: Half of the Time

question 52

Multiple Choice

A $500 investment has the following payoff frequency: half of the time it will pay $350 and the other half of the time it will pay $900. Its standard deviation and value at risk respectively are:

• A) $275; $150
• B) $625; $275
• C) $275; $350
• D) $125; $500

---

Definitions:

Inventory Account

An account that tracks the value of a company's inventory, including raw materials, work-in-process, and finished goods.

Perpetual Inventory System

An accounting method where inventory records are updated continuously as transactions occur.

Inventory Shrinkage

The loss of products due to factors like theft, damage, or error, which leads to a discrepancy between recorded inventory and actual stock.

Lost Or Stolen Goods

This term refers to inventory items that are missing due to theft or misplacement and represent a loss to the business.