Lester Has a Portfolio with an Average Return of 13

question 47

Multiple Choice

Lester has a portfolio with an average return of 13.5 percent and a standard deviation of 22.5 percent.He has a one percent probability of losing ________ percent or more in any given year.

• A) −33.97
• B) −38.94
• C) −20.23
• D) −5.04
• E) −8.37

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Definitions:

Variance

A statistical measure of the dispersion or spread in a set of data points, showing how far each number in the set is from the mean.

Coefficient Of Correlation

A statistical measure that calculates the strength of the relationship between the relative movements of two variables, represented typically by the Pearson correlation coefficient value.

Stocks

Shares in the ownership of a company, representing a claim on the company's assets and earnings.

Composed

Pertains to being made up of several parts or elements.