Asset a Has an Expected Return of 20% and a Standard

question 22

Multiple Choice

Asset A has an expected return of 20% and a standard deviation of 25%. The risk-free rate is 10%. What is the reward-to-variability ratio?

• A) .40
• B) .50
• C) .75
• D) .80

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Definitions:

No-Par

Refers to stocks issued without a par value, meaning the stock's value is not set and can be determined by the company's board of directors.

Stated Value

A specified value assigned to no-par-value stock by the company's board of directors.

General Journal

A comprehensive accounting record where all financial transactions are initially recorded, using a double-entry accounting system.

Nonparticipating

typically refers to an insurance or investment product feature where the holder does not have the right to receive dividends or bonuses generated from the underlying pool of assets.