A Stock Produced Returns of 19 Percent, 27 Percent, and -38

question 71

Multiple Choice

A stock produced returns of 19 percent, 27 percent, and -38 percent over three of the past four years. The arithmetic average for the past four years is 7 percent. What is the standard deviation of the stock's returns for the 4-year period?

• A) 11.63 percent
• B) 15.94 percent
• C) 19.70 percent
• D) 26.25 percent
• E) 30.21 percent

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Definitions:

Special Journal

A financial journal designed for recording a specific type of transaction in a more efficient manner.

Accrual Basis

An accounting method where revenues and expenses are recorded when they are earned or incurred, regardless of when the cash transaction occurs.

Cash Basis

An accounting method where revenues and expenses are recorded only when cash is received or paid out, regardless of when the transactions occurred.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material, labor, and manufacturing overhead expenses.