A Stock Analyst Was Provided with a List of 25

question 244

Multiple Choice

A stock analyst was provided with a list of 25 stocks. He was expected to pick 3 stocks from the list whose prices are expected to rise by more than 20% after 30 days. In reality, the prices of
Only 5 stocks would rise by more than 20% after 30 days. If he randomly selected 3 stocks from
The list, he would use what type of probability distribution to compute the probability that all of
The chosen stocks would appreciate more than 20% after 30 days?

• A) binomial distribution.
• B) Poisson distribution.
• C) hypergeometric distribution.
• D) none of the above.

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Definitions:

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting cost of goods sold.

Net Markups

The amount by which the price of a security is increased above its initial offering price to the public, after deducting any fees or commissions.

Net Markdowns

The reduction in the selling price of goods, net of any subsequent increases in price, affecting the gross margin of a retail operation.

Dollar-value LIFO Retail Method

An accounting method that adjusts inventory levels using the last-in, first-out (LIFO) principle, measured in dollar value, particularly for the retail industry.