Five Stocks Make Up Your Stock Portfolio

question 90

Multiple Choice

Five stocks make up your stock portfolio.The stocks are designated A, B, C, D and E.You plan to select a random sample of three of the stocks to be researched more fully.List the possible samples that you might choose if you use simple random sampling.

• A)ABC, ABD, ABE, ACA, ACE, AED, BCD, BCE, BDE, CDE
• B)ABC, ABD, ABE, ACD, ACE, ADE, BCD, BCC, BDE, CDE
• C)ABC, ABD, ABE, ACD, ACE, ADE, BCD, BCE, BDE, CDE
• D)ABC, ACB, ABE, ACD, ACE, ADE, BCD, BCE, BDE, CDE
• E)ABC, ACB, AEB, ADC, AEC, AED, BCD, BCE, BDE, EDC

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Definitions:

Capital Investment Analysis

The process of evaluating and selecting long-term investments consistent with the firm's goal of wealth maximization.

Cash Payback Period

the duration required to recover the cost of an investment through cash flows generated by the investment.

Annual Net Cash Inflow

The net amount of cash that flows into a company in a year after all expenses and outflows have been subtracted from total inflows.

Capital Rationing

The process of selecting the most profitable projects to invest in when a company has limited resources or capital available.