It Is Often Assumed That an Investment's Distribution of Returns

question 51

Multiple Choice

It is often assumed that an investment's distribution of returns follows a normal distribution because:

• A)investment distributions are not usually bell shaped.
• B)the expected value is the weighted average expected return from an investment.
• C)the expected value gives a measurement of risk.
• D)it enables an investment to be described by its expected value and standard deviation.

---

Definitions:

Market Price

The prevailing rate for transactions involving assets or services in an economic marketplace.

Earnings Per Share

A company's net profit divided by the number of its outstanding shares, indicating the profitability per share.

Merger Premium

The additional amount an acquirer pays over the current market price of a target company's shares during a merger or acquisition.