A Manager Is Attempting to Assess the Probability of a Recession

question 7

Multiple Choice

A manager is attempting to assess the probability of a recession ending in the next six months and its impact on expected profitability.The manager believes there is a 33 percent chance the recession will end in six months and profits will return to $100 million.However,there is a 67 percent chance the recession will not end in six months,resulting in a $7 million loss.The standard deviation of profits over the next six months is:

• A) $50.31 million.
• B) $57.40 million.
• C) $28.31 million.
• D) $0 million.

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Definitions:

Boreal Forest

A vast biome characterized by dense forests of coniferous trees, located in northern regions of North America, Europe, and Asia, also known as taiga.

Coniferous

Referring to trees that bear cones, such as pines and firs, often evergreen and found in cooler climates.

Forest Type

Classification of forests based on their ecological features, climate, and the dominant species of trees found within them.

Tropical Rain Forest

Highly productive and species-rich biome in which year-round rains and warmth support continuous growth of evergreen broadleaf trees.