An Asset Has an Average Historical Rate of Return of 13

question 44

Multiple Choice

An asset has an average historical rate of return of 13 percent and a variance of 0.0106.What range of returns would you expect to see approximately two-thirds of the time?

• A) -2.28 to + 24.48 percent
• B) -6.52 to + 32.92 percent
• C) -9.58 to + 38.8 percent
• D) +2.70 to + 23.30 percent
• E) +13.1 to + 13.3 percent

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Definitions:

Debt Securities

Financial instruments indicating that money has been borrowed and must be repaid, such as bonds, notes, and bills.

Issuing Debt

The act of a corporation or government borrowing money from investors by issuing bonds, notes, or other forms of debt securities.

Issuing Equity

The process by which a corporation sells new shares of stock to investors to raise capital.

Rights Offer

A proposition by a company to its existing shareholders to purchase additional shares directly from the company at a specified price for a certain period.