We Know, Based on Past History, That 72% of All

question 41

Multiple Choice

We know, based on past history, that 72% of all students who enter a particular university as freshmen will graduate in four years.If graduation rates and gender are independent, what proportion of female freshmen would we expect to graduate in four years?

• A) More than 72%
• B) Less than 72%
• C) Roughly 72%
• D) The percentage will depend on the proportion of female freshmen in the class.

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Definitions:

Semistrong Form

States that current market prices reflect all publicly available information. Therefore, the only way to gain abnormal returns on a stock is to possess inside information about the company’s stock.

Stock Market Efficiency

The concept that all available information is reflected in stock prices, thus making it impossible to consistently achieve higher returns than the overall market.

Nonconstant Growth Model

A valuation approach for stocks that assumes a company's dividends will grow at different rates in different periods, unlike the constant growth model.

Initial Growth Period

The phase in a business or project's life cycle characterized by a rapid expansion in revenue and customer base, often necessitating significant investment in marketing and capacity.