A Major Automobile Maker Has Two Models of Sedans

question 52

True/False

A major automobile maker has two models of sedans. The first model has been shown to get an average of 27 mpg on the highway with a standard deviation equal to 5 mpg. The second model gets 33 mpg on average with a standard deviation of 8 mpg. Based on this information the first car model is relatively more variable than the second car model.

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Definitions:

Put Option

A financial derivative that gives the holder the right, but not the obligation, to sell a specific quantity of an underlying asset at a set price within a specified time.

American Call-Option

A financial contract that gives the holder the right, but not the obligation, to buy a stock, bond, commodity, or other instruments at a specified price within a specific time period.

Dividend-Payout Policies

Strategies adopted by companies to decide the size and pattern of cash dividends to shareholders.

Dividend Yield

A financial ratio that indicates how much a company pays out in dividends each year relative to its stock price.