Answer:
option (B) 0.012634
Explanation:
Data provided in the question:
Expected return Probability
16.5% 80%
-11.6% 20%
Now,
Mean return = ∑( Probability × Expected return )
= ( 0.8 × 16.5% ) + ( 0.2 × (-11.6%) )
= 13.2% - 2.32%
= 10.88%
Thus,
Variance = ∑(Probability × [ Expected return - Mean return ]² )
= 0.8 × ( 16.5% - 10.88% )² + 0.2 × ( -11.6% - 10.88% )²
= 0.8 × ( 5.62% )² + 0.2 × (-22.48%)²
= 0.8 × 0.0562² + 0.2 × 0.2248²
= 0.002526752 + 0.010107008
= 0.01263376 ≈ 0.012634
Hence,
The correct answer is option (B) 0.012634
Answer:
22%
Explanation:
Margin of Safety is the amount by which sales can fall before making a loss.
Margin of Safety = Expected Sales - Break-even Sales ÷ Expected Sales
= (13,600 - 10,608) ÷ 13,600
= 0.22 or 22%
Actually I got mixed up, the answer i meant to write was B.
