A Stock Has a Standard Deviation of Daily Returns of 1

question 40

Multiple Choice

A stock has a standard deviation of daily returns of 1 percent. It wants to determine the lower boundary of its probability distribution of returns, based on 1.65 standard deviations from the expected outcome. The stock's expected daily return is .2 percent. The lower boundary is

• A)-1.45 percent.
• B)-1.85 percent.
• C)0 percent.
• D)-1.65 percent.

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Definitions:

Economies Of Scope

Cost advantages that a business experiences by producing a variety of products rather than specializing in a single product or service.

Economies Of Scope

Cost advantages that a business obtains through a variety of products rather than specializing in a single product.

Synergy

The concept that the value and performance of two companies combined will be greater than the sum of the separate individual parts.

Cost Complementarity

Occurs when the cost of producing one good decreases with the increase in production of another good, showing a synergy between the production processes of two goods.