The Probability the Economy Will Boom Is 10 Percent While

question 99

Multiple Choice

The probability the economy will boom is 10 percent while the probability of a recession is 20 percent.Stock A is expected to return 15 percent in a boom,9 percent in a normal economy,and lose 14 percent in a recession.Stock B should return 10 percent in a boom,6 percent in a normal economy,and 2 percent in a recession.Stock C is expected to return 5 percent in a boom,7 percent in a normal economy,and 8 percent in a recession.What is the standard deviation of a portfolio invested 20 percent in Stock A,30 percent in Stock B,and 50 percent in Stock C?

• A).6 percent
• B).9 percent
• C)1.8 percent
• D)2.2 percent
• E)4.9 percent

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Definitions:

Industrial and Organizational Psychologists

Psychologists who apply psychological theories and principles to organizations and the workplace to solve problems and improve the quality of work life.

Productivity

A measure of the efficiency of a person, machine, system, etc., in converting inputs into useful outputs.

Working Conditions

The environment in which an individual works, including aspects such as safety, hours, physical conditions, and stress levels.

Gestalt

A psychological approach that looks at the human mind and behavior as a whole, emphasizing that the whole is different from and greater than the sum of its parts.