Exhibit 1-5
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $\begin{array}{l}\text {Canadian T-bils } &2.75 \% \\\text {Canadian corporate bonds } &4.75 \%\end{array}$

question 47

Multiple Choice

Exhibit 1-5
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
Assume that during the past year the consumer price index increased by 1.5% percent and the securities listed below returned the following nominal rates of return.
$\begin{array}{l}\text {Canadian T-bils } &2.75 \% \\\text {Canadian corporate bonds } &4.75 \%\end{array}$
-Refer to Exhibit 1-5. If over the past 20 years the annual returns on the S&P 500 market index averaged 12% with a standard deviation of 18%, what was the coefficient of variation?

• A) 0.6
• B) 0.6%
• C) 1.5
• D) 1.5%
• E) 0.66%

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Definitions:

Economies of Scale

Economies of scale occur when a company reduces costs per unit due to an increase in production, typically achieved through operational efficiency and larger volume production.

Constant Returns to Scale

A situation in production where increasing all inputs by a certain factor results in output increasing by the same factor, indicating proportionate scalability.

AP

Advance Placement; a program in the United States and Canada offering college-level curriculum and examinations to high school students.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.