Suppose That Ms

question 9

Multiple Choice

Suppose that Ms.Lynch can make up her portfolio using a risk-free asset that offers a surefire rate of return of 15% and a risky asset with an expected rate of return of 25%, with standard deviation 5.If she chooses a portfolio with an expected rate of return of 20%, then the standard deviation of her return on this portfolio will be

• A)2.50%.
• B)5%.
• C)5.50%.
• D)1.25%.
• E)None of the above.

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Definitions:

First Year

The initial year of operation, production, or accounting period.

Absorption Costing

An accounting method that integrates all costs associated with manufacturing, from direct materials and labor to variable and fixed overheads, into the final cost of a product.

Variable Costing

A costing method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of goods sold, excluding fixed overhead.

Operating Income

The profit realized from a business's operations after deducting operating expenses such as wages, depreciation, and cost of goods sold.