A Stock Has an Annual Expected Return of 12

question 77

Multiple Choice

A stock has an annual expected return of 12.5 percent and an annual standard deviation of 48 percent. What is the smallest expected loss over the next year with a probability of 5 percent?

• A) -57.21%
• B) -62.89%
• C) -69.27%
• D) -66.46%
• E) -60.18%

---

Definitions:

Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion of a set of data values.

Variability

The extent to which data points in a set differ from each other and from the average of the set, indicating the spread or dispersion.

Double-Blind Study

A double-blind study is a research design in which neither the participants nor the experimenters know who is receiving a particular treatment, to prevent bias.

Experimental Group

In an experiment, the group of participants who are exposed to the independent variable to assess its effect on a dependent variable.