A Stock Has an Average Return of 18

question 72

Multiple Choice

A stock has an average return of 18.2 percent and a standard deviation of 10.7 percent. In any one given year, you have a 95 percent chance that you will not lose more than _____ percent nor earn more than ____ percent if you invest in this security.

• A) -3.2 percent to 28.9 percent
• B) -3.2 percent to 39.6 percent
• C) -13.9 percent to 28.9 percent
• D) -13.9 percent to 39.6 percent
• E) -13.9 percent to 50.3 percent

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Definitions:

Profit-Maximizing

A strategy or approach used by firms to determine the price and output level that delivers the maximum profit.

Long-Run Equilibrium

A state in which all firms in a market are producing at their minimum long-run average cost, with no incentive to enter or exit the market.

Monopolistic Competition

A market structure where many companies sell products that are similar but not identical, allowing for competition on factors other than price.

General Snacks

A broad category that includes various snack foods available in the market, without any specific branding implication.