A Security with Normally Distributed Returns Has an Annual Expected

question 36

Multiple Choice

A security with normally distributed returns has an annual expected return of 18% and standard deviation of 23%. The probability of getting a return between -28% and 64% in any one year is ________.

• A) 68.26%
• B) 95.44%
• C) 99.74%
• D) 100%

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Definitions:

Externalities

Economic side effects or consequences of commercial activities that affect other parties without being reflected in the cost of the goods or services involved.

Market Failure

A less than efficient allocation of resources.

Public Goods

Public goods refer to commodities or services that are made available to all members of a society, typically funded by the government, and characterized by non-excludability and non-rivalry in consumption.

Externalities

Consequences of an economic activity experienced by unrelated third parties; can be positive or negative.