A Financial Analyst Is Presented with Information on the Past

question 71

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:

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often receiving dividends before common shareholders.

Treasury Stock

Shares that were issued and subsequently repurchased by the issuing company, reducing the amount of outstanding stock on the open market.

Financial Statements

Reports that provide an overview of a company's financial condition, including balance sheet, income statement, and cash flow statement.

Paid-In Capital

Funds raised by a company through the sale of its own shares.