The Mean of the Probability Distribution of a Stock's Return

question 179

True/False

The mean of the probability distribution of a stock's return is the statistical representation of the average investor's expected return. It is the return investors plan on receiving when they buy the stock.

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Definitions:

Short Run

A period in economics during which at least one input, for example, capital or labor, is considered fixed in quantity, while other inputs can be varied to adjust production levels.

Price Level

The mean of current costs for a wide range of goods and services within the economy, indicative of either inflation or deflation.

Exercise Price

The exercise price is the price at which the holder of an options contract can buy or sell the underlying asset when the option is exercised.

Exchange Ratio

The rate at which one asset or security can be exchanged for another in a merger, acquisition, or other financial transactions.