The Closing Price of a Company's Stock Tomorrow Can Be

question 13

Multiple Choice

The closing price of a company's stock tomorrow can be lower, higher or the same as today's closing price. Without any prior information that may affect the price of the stock tomorrow, the probability that it will close higher than today's close is 1/3. This is an example of using which of the following probability approach?

• A) a priori probability
• B) empirical probability
• C) subjective probability
• D) conditional probability

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Definitions:

Adjusted Trial Balance

A list of all accounts and their balances after adjustments are made for accruals, deferrals, and other adjustments, used in the preparation of financial statements.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts.

Permanent Accounts

Accounts that are not closed at the end of the accounting period, hence carry their balances over into the next period; these include asset, liability, and equity accounts.

Temporary Accounts

Accounts that are closed at the end of each accounting period, including revenue, expense, and dividend accounts.