The Law of Large Numbers

question 84

Multiple Choice

The law of large numbers:

• A) can be used to explain why some people are risk averse and others are risk neutral or risk loving.
• B) can be used to explain why some people choose to self-insure against random, single and largely unpredictable events.
• C) states that large amounts of information are often preferred to small amounts of information.
• D) states that the average outcome of a large number of similar events can often be predicted.

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Definitions:

Poison Pill Defense

A strategy used by companies to prevent or deter hostile takeovers by making the target company less attractive to the acquirer.

Greenmail Arrangement

A situation where a company buys back its own shares from a potential acquirer at a higher price to avoid a takeover attempt.

Pre-Offer Strategy

A plan devised prior to making an offer, typically in negotiation or bidding contexts, to maximize successful outcomes.

Tender Offer

A public proposal made by a person or company to shareholders to buy shares of a corporation, typically at a premium over the market price.