David Has $10,000 Worth of Stocks in His Trading Account

question 1

Multiple Choice

David has $10,000 worth of stocks in his trading account. He needs to cash in $1,000 worth of stock to make a purchase. He could sell shares in one stock (Jupiter, Inc.) that cost him $2,000 initially but is now only worth $1,000, or he could sell shares in another stock (Mercury Co.) that he bought for $500 but is now worth $1,000. Even though the amount of money withdrawn would be the same, which stock is he more likely to cash out?

• A) Jupiter, Inc.
• B) Mercury Co.
• C) He is more likely to select a stock that was originally purchased at $1,000.
• D) The original stock price will have no influence on his decision.

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Definitions:

Right-Skewed

Describes a distribution of data where the tail on the right side of the distribution is longer or fatter than the left side, indicating that the mean is greater than the median.

Standard Deviation

The square root of the variance, measuring the dispersion of a dataset relative to its mean.

Mean

The mathematical calculation where you add all the numbers in a set and divide by the number of elements to find the average.

Mound-Shaped Distribution

A data distribution that is symmetric and bell-shaped, often resembling the normal distribution but not necessarily having its mathematical properties.