Compaq Recently Adjusted the Probabilities for Its Expected Cash Flows

question 1

Multiple Choice

Compaq recently adjusted the probabilities for its expected cash flows in light of the Asian currency crisis.It revised the probability of favorable conditions from 32% to 18% and the probability of poor earnings from 7% to 17%.Which of the following is the most likely result from this revision?

• A) It would raise expected returns.
• B) It would lower expected returns.
• C) The probabilities cannot be revised once they have been estimated.
• D) It would lower its historical return.
• E) It would have no effect on expected returns.

---

Definitions:

Translation

The process by which ribosomes synthesize proteins using the mRNA transcript as a template.

DNA Template

the strand of DNA that specifies the nucleotide sequence of a newly synthesized strand during replication or transcription.

Genetic Information

The data encoded in an organism's DNA, including genes that determine physical and some behavioral traits.

Eukaryotes

Organisms whose cells contain a nucleus and other organelles enclosed within membranes.