The Expected Return on a Security Is Currently Based on a 22

question 21

Multiple Choice

The expected return on a security is currently based on a 22 percent chance of a 15 percent return given an economic boom and a 78 percent chance of a 12 percent return given a normal economy. Which of the following changes will decrease the expected return on this security? I. an increase in the probability of an economic boom
II) a decrease in the rate of return given a normal economy
III) an increase in the probability of a normal economy
IV) an increase in the rate of return given an economic boom

• A) I and II only
• B) I and IV only
• C) II and III only
• D) I, III, and IV only
• E) I, II, III, and IV

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The condition of being free from unauthorized intrusion or disclosure, especially with respect to personal information.

Revenue Streams

The various sources from which a business earns money.

Loss-Leader Pricing

A pricing strategy where a product is sold at a price below its market cost to stimulate other profitable sales.

Pro Forma Income Statement

A financial statement that projects a company’s revenues, expenses, and net income for a specific period in the future, based on assumptions.