-Using Standard Deviations, Which Bank Is in a Better Position

question 50

Multiple Choice

$$\begin{array} { l c l l } & \text { National Benchmark } & \text { Bank A } & \text { Bank B } \\\text { Consumer Loans } & 50 \text { percent } & 65 \text { percent } & 35 \text { percent } \\\text { Commercial Loans } & 50 \text { percent } & 35 \text { percent } & 65 \text { percent }\end{array}$$
-Using standard deviations, which bank is in a better position if the average earnings on the assets of Bank A is 11 percent and Bank B is 12 percent (ignore all other factors) ?

• A)Bank B, because its earnings of 12 percent is higher than Bank A's 11 percent while, its standard deviation is lower.
• B)Bank B, because its earnings of 12 percent is higher compared to Bank A's 11 percent, while its standard deviation is higher.
• C)Bank B, because its earnings of 12 percent is higher compared to Bank A's 11 percent, while its standard deviation is the same.
• D)Bank A, because although its earnings of 11 percent is lower compared to Bank B's 12 percent, its standard deviation is significantly lower.
• E)Bank A, because although its earnings of 11 percent is lower compared to Bank B's 12 percent, its standard deviation is the same.

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Definitions:

Lens

A piece of transparent material, usually glass or plastic, that refracts or focuses light rays, used in glasses, cameras, and various optical devices.

Wavelength

Wavelength refers to the distance between successive crests of a wave, especially in physics, where it determines the properties of waves of light and sound.

Perception

The process by which sensory information is organized, interpreted, and consciously experienced.

Hue

A property of color determined by its dominant wavelength, perceived as one of the basic aspects of color such as red, green, or blue.