A Financial Analyst Is Presented with Information on the Past

question 148

Multiple Choice

A financial analyst is presented with information on the past records of 60 start-up companies and told that in fact only 3 of them have managed to become highly successful. He selected 3 companies from this group as the candidates for success. To analyze his ability to spot the companies that will eventually become highly successful, he will use what type of probability distribution?

• A) Binomial distribution
• B) Poisson distribution
• C) Hypergeometric distribution
• D) None of the above.

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Definitions:

Sensitivity Analysis

A technique used to determine how different values of an independent variable affect a particular dependent variable under a given set of assumptions.

Estimates of Inputs

Projections or calculations regarding the amount or type of resources (like raw materials, labor, and capital) required to achieve a certain production output.

Flexible Production Capacity

The ability of a manufacturing system to adjust and adapt its output levels in response to changes in demand or production needs.

Global Network

A worldwide interconnected infrastructure, enabling businesses to transact, communicate, and collaborate across borders.