Suppose That the Returns on an Investment Are Normally Distributed

question 28

Multiple Choice

Suppose that the returns on an investment are normally distributed with an expected return of 8% and standard deviation of 4%.What is the likelihood of making a negative return? (Hint: the area under a curve for 1 std dev is 34.13%,2 std dev is 47.73% and 3 std dev is 49.87%) .

• A)47.73%
• B)34.13%
• C)15.87%
• D)2.27%

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Definitions:

Perception

The process of interpreting sensory information, enabling us to recognize meaningful objects and events in our environment.

Crisis Intervention

Immediate and short-term psychological support aimed at assisting individuals in distress to restore balance and reduce the impact of a crisis situation.

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The method or strategy used to convey information effectively between individuals or groups.

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A form of therapy involving conversations with a trained professional to address emotional and psychological challenges.