What Is the Smallest Expected Loss with a Probability of 2.5

question 86

Multiple Choice

What is the smallest expected loss with a probability of 2.5 percent over the next two months for a portfolio with an annual expected return of 13 percent and a standard deviation of 28 percent?

• A) -24.07%
• B) -20.24%
• C) -28.91%
• D) -26.32%
• E) -22.86%

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Definitions:

Earnings Surprise

When a company's actual reported financial results deviate from the expected figures, leading to an unexpected increase or decrease in its stock price.

Future Earnings

The projected income a company is expected to earn at a future date.

Incorrect Estimates

Errors or inaccuracies in predicting financial outcomes or assumptions, which can impact the financial statements and decision-making.

Fair Value

An estimate of the market value of a property, financial asset, or liability, based on current market prices or valuations.