When Forecast Errors Occur in a Normally Distributed Pattern, the Ratio

question 11

True/False

When forecast errors occur in a normally distributed pattern, the ratio of the mean absolute deviation to the standard deviation is 2 to 1, or 2 x MAD = 1 standard deviation.

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Definitions:

Cash Inflows

The total amount of money being transferred into a business, project, or financial product from various sources.

Discount Rate

The interest rate applied for computing the present value of future cash flows in DCF scrutiny.

Average Book Value

The mean value of a company's assets or investments, as recorded on its financial statements over a specific period of time.

Average Net Income

The mean amount of net earnings calculated over a specified period, indicating the profitability of a business after all expenses have been subtracted from revenues.