60.If a random variable follows a normal distribution, what is the probability that the random variable is larger than 1.96 standard deviations larger than the mean?A)1.25%B)2.50%C)3.75%D)5.00%Ans:BFormat: Multiple ChoiceLearning Objective: LO 4Level of Difficulty: MediumBloomcode: ApplicationAASCB: AnalyticIMA: Quantitative MethodsAICPA: Measurement 61.If a random variable follows a normal distribution, what is the probability that the random variable is larger than 1.96 standard deviations below the mean?

Format: Multiple ChoiceLearning Objective: LO 4Level of Difficulty: MediumBloomcode: ApplicationAASCB: AnalyticIMA: Quantitative Methods AICPA: Measurement 62.Tommie has made an investment that will generate returns that are subject to the state of the economy during the year. Use the following information to calculate the standard deviation of the return distribution for Tommie's investment. Do not round intermediate computations. Round your final answer to four decimal places.StateReturnProbabilityWeak0.130.30OK0.200.40Great0.250.30A)0.0453B)0.0467C)0.0481D)0.0495Ans:BFeedback:E(R) = (0.30 × 0.13) + (0.40 × 0.20) + (0.30 × 0.25) = 0.194Var (R) = 0.30 × (0.13 – 0.194)2+ 0.4 × (0.20 – 0.194)2+ 0.30 × (0.25 – 0.194)2= 0.002184Std (R) = √(0.002184)= 0.0467 (rounded)Format: Multiple ChoiceLearning Objective: LO 4Level of Difficulty: MediumBloomcode: ApplicationAASCB: AnalyticIMA: Quantitative MethodsAICPA: Measurement 63.Elrond has made an investment that will generate returns that are subject to the state of the economy. Use the following information to calculate the variance of the return distribution for Elrond's investment. Do not round intermediate computations. Round your final answer to fourdecimal places.StateReturnProbabilityWeak0.100.8OK0.170.1Great0.280.1A)0.0536B)0.0543C)0.0550

Format: Multiple ChoiceLearning Objective: LO 5Level of Difficulty: HardBloomcode: ApplicationAASCB: AnalyticIMA: Quantitative MethodsAICPA: Measurement64.Stock A has exhibited a standard deviation in stock returns of 0.5, whereas Stock B has exhibited a standard deviation of 0.6. The correlation coefficient between the stock returns is 0.5. What is the variance of a portfolio composed of 70 percent Stock A and 30 percent Stock B?Feedback:222211221212122222()2(0.7) (0.5)(0.3) (0.6)2(0.7)(0.3)(0.5)(0.6)(0.5)0.2179Var portxxx x Format: Multiple ChoiceLearning Objective: LO 5Level of Difficulty: HardBloomcode: ApplicationAASCB: AnalyticIMA: Quantitative MethodsAICPA: Measurement