Downtown Industries Common Stock Had Returns of 5

question 91

Multiple Choice

Downtown Industries common stock had returns of 5.2,10.3,9.3,and 9.5 percent,respectively,over the past four years.What is the standard deviation of these returns?

• A) 2.29 percent
• B) 2.38 percent
• C) 2.41 percent
• D) 2.59 percent
• E) 2.82 percent

Understand the concept of true score theory and standard error of measurement.

Differentiate between criterion-referenced and norm-referenced interpretations.

Be able to calculate and interpret z-scores and their conversions to other scales (e.g., DIQ, T scores, percentiles).

Understand the role of standard deviation and mean in the interpretation of test scores.

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Definitions:

Market Risk

The risk of losses in financial markets due to factors such as market volatility, interest rate changes, and economic downturns that affect the entire market.

Required Return

The minimum return that investors expect or demand for an investment to be worth it, considering its risk level.

Portfolio

An assortment of investments including stocks, bonds, commodities, cash and equivalents, along with closed-end funds and ETFs (exchange traded funds).

Market Risk Premium

The additional return an investor expects from holding a risky market portfolio instead of risk-free assets.