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%.

---

Definitions:

Perception

The way in which something is regarded, understood, or interpreted by an individual or group.

Sensory Information

Describes data gathered through the senses such as sight, sound, touch, taste, and smell, which is used by organisms to interact with their environment.

Personality

The combination of emotional, attitudinal, and behavioral response patterns of an individual.

Value System

An individual or group's hierarchy of beliefs and attitudes that fundamentally influence behavior and decision-making.