An Asset Has an Average Annual Historical Return of 11

question 62

Multiple Choice

An asset has an average annual historical return of 11.6 percent and a standard deviation of 17.8 percent.What range of returns would you expect to see 95 percent of the time?

• A) -41.8 to + 65.0 percent
• B) -34.4 to + 53.6 percent
• C) -24.0 to + 47.2 percent
• D) -6.2 to + 29.4 percent
• E) -5.4 to + 41.0 percent

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Definitions:

Initial Value Method

A financial accounting method where investments are recorded at their purchase cost without subsequent adjustment for changes in fair value.

Markup

The amount added to the cost price of goods to cover overhead and profit.

Inventory Transfers

Movements of inventory from one location to another within the same company, affecting the management of stock levels and valuation for accounting purposes.

Effective Income Tax Rate

The average rate at which an individual or corporation is taxed, calculated by dividing the total income tax expense by the taxable earnings or income.