SOA Exam P Sample Question 294
Study guide: Exam P-1
The probability that the economy will improve, remain stable, or decline is:
| State of the Economy | Probability |
|---|---|
| Improve | 0.30 |
| Remain stable | 0.50 |
| Decline | 0.20 |
Prices for Stock X and Stock Y will change as follows:
| State of the Economy | Stock X | Stock Y |
|---|---|---|
| Improve | Increase 18% | Increase 15% |
| Remain stable | Increase 8% | Increase 7% |
| Decline | Decrease 13% | Decrease 6% |
Determine which of the following statements about the percentage price changes for Stock X and Stock Y is true.
- A) The percentage change for Stock X has a larger variance and a larger mean.
- B) The percentage change for Stock X has a larger variance and the means are equal.
- C) The percentage change for Stock X has a larger variance and a smaller mean.
- D) The variances are equal and the percentage change for Stock X has a larger mean.
- E) Both the variances and the means are equal.
Answer this question and see the worked solution