What Is the Standard Deviation of the Returns on a Stock

question 27

Multiple Choice

What is the standard deviation of the returns on a stock given the following information? $$\begin{array} { l c c } \begin{array} { l } \text { State of } \\\underline{\text { Economy }}\end{array} & \begin{array} { l } \text { Probability of } \\\underline{\text { State of Economy} }\end{array} & \begin{array} { c } \text { Rate of Return } \\\underline{\text { if State Occurs }}\end{array} \\ \text { Boom } & 10 \% & 16 \% \\\text { Normal } & 60 \% & 11 \% \\\text { Recession } & 30 \% & \mathbf { - 8 } \%\end{array}$$

• A)5.80%
• B)7.34%
• C)8.38%
• D)9.15%
• E)9.87%

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Definitions:

Manifest Content

In psychoanalytic theory, the apparent and remembered content of a dream, as contrasted with its hidden or latent content.

Latent Content

Unconscious underlying meanings of dreams and creative processes, distinct from the overt storyline or manifest content.

Sexual Content

Material in media or art that explicitly or implicitly relates to sexual themes, acts, or references.

Frequency

The number of occurrences of a repeating event per unit of time.