What Is the Standard Deviation of the Payoff from an Investment

question 20

Multiple Choice

What is the standard deviation of the payoff from an investment that yields $5,000 with a probability of 0.15 and $500 with a probability of 0.85?

• A) $0
• B) $2,581,875
• C) $42.50
• D) $1,606.82

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Definitions:

Social Security Check

A monthly payment issued by the government to eligible individuals, typically retirees, disabled persons, and survivors of deceased workers, as part of a social insurance program.

U.S. GDP

The total market value of all goods and services produced within the United States in a given year.

Groceries

Items of food and other household necessities that are purchased regularly for consumption.

Real GDP

Gross Domestic Product adjusted for inflation, measuring the value of all final goods and services produced within a country's borders in a specific time period.