Sarah's Portfolio Has an Expected Annual Return at 8%,with an Annual

question 84

Multiple Choice

Sarah's portfolio has an expected annual return at 8%,with an annual standard deviation at 12%.If her investment returns are normally distributed,then in any given year Sarah has approximately ______________________.

• A) A 50% chance that the actual return will be greater than 8%
• B) About a 68% chance that the actual return will fall within 4% and 20%
• C) About a 68% chance that the actual return will fall within -20% and 20%
• D) About a 95% chance that the actual return will fall within -4% and 28%.

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Definitions:

Weighted-Average Method

A process costing method that calculates unit costs by combining costs and outputs from the current and prior periods.

Percentage Completion

A measure used in accounting and project management to indicate the progress of projects or production, based on the completion percentage of the total work.

Process Costing System

A method used to assign production costs to units of product when nearly identical products are mass produced.

Overhead Allocated

The portion of overhead costs assigned to a specific product, department, or project.