Investment in New Issues (The Stock of Newly Formed Companies)

question 204

Multiple Choice

Investment in new issues (the stock of newly formed companies) can be both suicidal and rewarding. Supposethat of 500 newly formed companies in 2010, only 18 appeared to have outstanding prospects. Suppose thatyou had selected two of these 500 companies back in 2010. Find the probability that at least one of yourcompanies had outstanding prospects.

• A) 0.0707735
• B) 0.3581242
• C) 0.9292265
• D) 0.0347735

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Definitions:

Offering

The process or act of presenting something for acceptance, consideration, or use, such as a financial instrument or a proposal.

Discharge by Performance

The termination of a contractual obligation when both parties fulfill their respective duties as agreed in the contract.

Discharged

The state of being released from a legal, financial, or other obligation.

Substantially Performed

A legal concept indicating that a contract has been fulfilled enough to meet its essential requirements, despite minor variances from the exact terms.