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

question 29

Multiple Choice

You have been given this probability distribution for the holding-period return for GM stock: $$\begin{array} { l c c } \text { Stock of the Economy } & \text { Probability } & \text { HPR } \\\text { Boom } & 0.40 & 30 \% \\\text { Normal growth } & 0.40 & 11 \% \\\text { Recession } & 0.20 & - 10 \% \\\hline\end{array}$$ What is the expected standard deviation for GM stock?

• A) 16.91%
• B) 16.13%
• C) 13.79%
• D) 15.25%
• E) 14.87%

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Definitions:

Retroactive Restatement

Adjusting previously reported financial statements to reflect better understanding or corrections of past errors.

Dividend Yield

A financial ratio that indicates how much a company pays out in dividends each year relative to its share price.

Common Stock

Represents ownership shares in a corporation, giving holders a claim on part of the company’s assets and earnings.

Net Income

Total income of the company after expenses, taxes, and any other costs are deducted from its revenue.