Use the Following Information to Calculate the Standard Deviation of Macadam

question 113

Multiple Choice

Use the following information to calculate the standard deviation of Macadam Corp.'s returns. $\begin{array}{lll}\text { State}&\text {Probability }&\text { Return}\\\text { Boom } & 20 \% & 40 \% \\\text { Normal } & 60 \% & 15 \% \\\text { Recession } & 20 \% & (20 \%) \end{array}$

• A) 8.6%
• B) 11.4%
• C) 19.2%
• D) 19.8%

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Definitions:

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating the rate of tax that applies to each additional dollar of income.

Marginal Tax Rate

The rate of tax applied to the next dollar of taxable income, which increases in brackets as income rises.

Proportional Income Tax

A tax system where the rate of taxation is the same for all taxpayers, regardless of income level.