If the Daily Returns on the Share Market Are Normally

question 33

Multiple Choice

If the daily returns on the share market are normally distributed with a mean of 0.05% and a standard deviation of 1.00%, the probability that the share market would have a return of -23.00% or worse on one particular day (as it did on Black Monday) is approximately ________.

• A)0.0%
• B)0.1%
• C)1.0%
• D)10.0%

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Definitions:

Equity Method

An accounting method used to assess the profits earned through the investment in another company by updating the investment's value based on the investee's net income or loss.

Journal Entries

The record of financial transactions in an accounting system, entered as debits and credits to various accounts.

Loss

The financial result of an operation or transaction where expenses exceed revenues.

Significant Influence

The power to participate in the financial and operating policy decisions of another entity, but not control those policies, typically associated with ownership of 20% to 50% of voting shares.