Which of the Following Statements Is Correct

question 14

Multiple Choice

Which of the following statements is correct?

• A) A complete probability distribution is always an objective listing of all possible events.Since it is impossible to list all the possible outcomes from a single event,probability distributions are of limited benefit in assessing risk.
• B) A peaked probability distribution centered around the expected value will make a stock more desirable,thereby increasing its expected return.
• C) In the real world,there are an infinite number of possible states or outcomes that can occur.Thus,probability distributions actually are continuous;however,for simplicity,financial managers typically reduce the number of states for analysis to a manageable number.
• D) Risk refers to the chance that some unfavorable event will occur while a probability distribution is completely described as a listing of the likelihood of unfavorable events.
• E) The higher the probability that the return from an investment will pay off its average promised value the lower will be the expected return,regardless of the distribution of the investment's returns.

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Definitions:

Percentage

A portion of a whole expressed as a fraction of 100, used to quantify relative quantities or compare values.

Pricing Decisions

The process involved in setting a selling price for a product or service, considering costs, competition, target market, and profit margins.

Pricing Strategy

The approach a business takes in setting the prices for its products or services, taking into account factors like cost, competition, target market, and desired profit margins.

Luxury Watchmaker

A company or individual specialized in designing, manufacturing, and selling high-end, precision timepieces, often with a focus on craftsmanship and prestige.