Assume a Portfolio Has the Possibility of Returning 7%, 8

question 27

Multiple Choice

Assume a portfolio has the possibility of returning 7%, 8%, 10%, or 12%, with a likelihood of 20%, 30%, 25%, and 25%, respectively. Considering the portfolio's standard deviation and expected value, would you say that this portfolio is of:

• A)average yield, low-risk.
• B)lower-than-average yield, low-risk.
• C)average yield, average risk.
• D)Not enough information to tell

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Definitions:

Long-term Investments

Assets purchased by a company that are intended to be held for more than one year, typically including stocks, bonds, or real estate.

Bonds Payable

Long-term liabilities represented by bonds that a company must repay at a future date, often including periodic interest payments.

Cash Dividend

A distribution of profits by a company to its shareholders, typically given as cash.

Direct Method

An approach in cost accounting where specific costs are directly traced to cost objects without any allocation, ensuring clear cost attribution.