An Investment Consultant Tells Her Client That the Probability of Making

question 52

Multiple Choice

An investment consultant tells her client that the probability of making a positive return with her suggested portfolio is 0.90. What is the risk, measured by standard deviation that this investment manager has assumed in her calculation if it is known that returns from her suggested portfolio are normally distributed with a mean of 6%?

• A) 1.28%
• B) 4.69%
• C) 6.00%
• D) 10.0%

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Definitions:

Halo Effect

A cognitive bias where an individual's overall impression of a person influences their feelings and thoughts about that person's character.

Central Route

denotes a pathway of persuasion that involves thoughtful consideration of the arguments presented, leading to cognitive processing that can influence attitudes strongly and durably.

Advertisement Wear-out

The decline in advertising effectiveness that occurs when an audience becomes overly familiar with a campaign, leading to decreased attention and response.

Credible Sources

Informational materials or entities regarded as trustworthy and reliable for facts, data, or news.