You Read a Story in the Newspaper Announcing the Proposed

question 43

Multiple Choice

You read a story in the newspaper announcing the proposed merger of Dell Computer and Gateway. The merger is expected to greatly increase Gateway's profitability. If you decide to invest in Gateway stock,you can expect to earn

• A)above average returns since you will share in the higher profits.
• B)above average returns since your stock price will definitely appreciate as higher profits are earned.
• C)below average returns since computer makers have low profit rates.
• D)a normal return since stock prices adjust to reflect expected changes in profitability almost immediately.

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Definitions:

Normally Distributed

A probability distribution characterized by a symmetrical bell-shaped curve, where mean, median, and mode are equal.

Probability

The probability or possibility of an event happening.

CFO's Salary

The compensation awarded to the Chief Financial Officer of an organization, encompassing salary, bonuses, and other financial benefits.

Positively Skewed

Describes a distribution of data where most values are concentrated on the left, with a long tail extending to the right.