The General Manager of the Service Department of a Television

question 205

Multiple Choice

The general manager of the Service Department of a television company has estimated that the time that elapses between the dates of purchase and the dates on which the 19-inch. sets manufactured by the company first require service is normally distributed with a mean of months and a standard deviation of months. ​
If the company gives a 1-year warranty on parts and labor for these sets, determine the percentage of sets manufactured and sold by the company that may require service before the warranty period runs out.
​

• A) percent sets may require service before the warranty period runs out.
• B) percent sets may require service before the warranty period runs out.
• C) percent sets may require service before the warranty period runs out.
• D) percent sets may require service before the warranty period runs out.

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Definitions:

Asset Securitization

The process of pooling various types of contractual debt such as mortgages, and selling their related cash flows to third party investors as securities.

Investment Choices

The various options available to investors for allocating their funds, including stocks, bonds, real estate, and mutual funds.

Returns

The profit or loss generated on an investment over a specific period.

Credit Default Swaps

Credit default swaps are financial derivative contracts that transfer the risk of default on a debt from one party to another, with the buyer of the swap making payments to the seller and receiving compensation if the debt instrument defaults.