A Portfolio Has a Standard Deviation of 15

question 41

Multiple Choice

A portfolio has a standard deviation of 15.8 percent and an average return of 14.2 percent. What loss is associated with a 2.5 percent probability?

• A) -12.03 percent
• B) -14.87 percent
• C) -16.77 percent
• D) -17.38 percent
• E) -19.36 percent

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Definitions:

Economic Inefficiency

Economic Inefficiency occurs when resources are not allocated optimally, leading to waste or missed opportunities in the production or distribution of goods and services.

Oligopoly

A market structure characterized by a small number of firms which dominate the market, leading to limited competition.

First-Mover Advantage

In game theory, the benefit obtained by the party that moves first in a sequential game. A situation that occurs in a sequential game if the player who gets to move first has an advantage in terms of final outcomes over the player(s) who move subsequently.

Simultaneous Game

A strategic interaction (game) between two or more parties (players) in which every player moves (makes a decision) at the same time.