The Mean Change in the Value of a Portfolio of Trading

question 53

Multiple Choice

The mean change in the value of a portfolio of trading assets has been estimated to be 0 with a standard deviation of 20 percent. Yield changes are assumed to be normally distributed.
-What is the maximum yield change expected if a 98 percent confidence (one-tailed) limit is used?

• A)3.30%.
• B)20.0%.
• C)33.0%.
• D)39.2%.
• E)46.6%.

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Definitions:

Purchased On Account

Transactions where goods or services are bought on credit, with payment to be made at a later date.

Accounts Receivable

Amounts due to a firm from its clients for goods or services delivered but not yet compensated for.

Subsidiary Ledgers

Detailed records that contain information about specific accounts, supporting the totals recorded in the general ledger.

General Ledger

The master set of accounts that summarize all transactions occurring within an entity, providing a complete record of financial transactions over the life of the company.