Which of the Following Statements Best Describes the Law of Large

question 47

Multiple Choice

Which of the following statements best describes the law of large numbers?

• A) Large numbers of people should be involved if a gamble has to be successful.
• B) Risk involved in a gamble is low when the money invested in it is large.
• C) The mean return will get closer and closer to its expected value the more times a gamble is repeated.
• D) Risk involved in a gamble is low when the prize is large.

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Definitions:

Unrealized Gain

Profits that have been earned on paper from an investment but have not been realized through a sale, and thus are not included in the income statement until realized.

Amortization

The gradual reduction of a debt or the allocation of the cost of an intangible asset over a period of time.

Fair Value Increments

Adjustments made to the book values of assets or liabilities to reflect their fair value at the time of acquisition in a business combination.

Bargain Purchase

A situation where the purchase price of a company is less than the fair value of its net identifiable assets.