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A Financial Analyst Is Presented with Information on the Past

question 40

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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?


Definitions:

Par Common Stock

The nominal or face value of a share of common stock as stated in the corporate charter, with no direct link to the market value.

Articles Of Incorporation

Legal documents filed with a governmental body to legally document the creation of a corporation.

Shares

Portions of ownership in a corporation.

Date Of Record

A specific date set by a company on which the shareholders of record are entitled to receive a dividend or other distribution.

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