A Stock Had Returns of 22 Percent,1 Percent,−27 Percent,19 Percent,and

question 75

Multiple Choice

A stock had returns of 22 percent,1 percent,−27 percent,19 percent,and 7 percent annually for the past 5 years.Based on these returns,what is the approximate probability that this stock will earn at least 60 percent in any one given year?

• A)almost 0%
• B)slightly more than 2.28%
• C)slightly more than 0.13%
• D)slightly less than 2.28%
• E)slightly less than 0.13%

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Definitions:

Cost Method

An accounting approach used to account for investments, where the investment is recorded at its cost and adjustments are made for dividends received or possible impairments.

Note Disclosure

An explanatory or descriptive information included within financial statements, usually providing details about the basis of preparation, accounting policies, and specifics of certain account balances.

Capitalize

The accounting practice of recording a cost or expense on the balance sheet for the purposes of delaying full recognition of the expense over time through depreciation or amortization.

Depreciate

To allocate the cost of a tangible asset over its useful life, reflecting the decline in the asset's value due to use and wear and tear.