You Have Been Given This Probability Distribution for the Holding-Period

question 16

Multiple Choice

You have been given this probability distribution for the holding-period return for KMP stock: $$\begin{array} { l c c } \text { Stock of the Economy } & \text { Probability } & \text { HPR } \\\text { Boom } & 0.30 & 18 \% \\\text { Normal growth } & 0.50 & 12 \% \\\text { Recession } & 0.20 & - 5 \% \\\hline\end{array}$$ What is the expected variance for KMP stock?

• A) 66.04%
• B) 69.96%
• C) 77.04%
• D) 63.72%
• E) 78.45%

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Definitions:

Standard Labour Hours

The estimated hours required to produce a unit of product, used in planning and efficiency analysis.

Actual Total Labour Cost

The real expense incurred for labor during the production process, covering all employees directly involved in manufacturing.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity according to standards.

Direct Material Used

The raw materials directly incorporated into a product during the manufacturing process.