We Draw a Card from a Deck 6 Times (Replacing

question 152

Multiple Choice

We draw a card from a deck 6 times (replacing the card after each draw) and get 3 kings.How likely is this?

• A)Yes.
• B)No.More than two outcomes are possible.
• C)No.The chance of getting a king changes as cards are drawn.
• D)No.6 is more than 10% of 52.
• E)No.The draws are not independent of each other.

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Definitions:

Distressed Firm

A company experiencing financial hardships, often reflected in its inability to meet financial obligations.

Capital Structure

Capital Structure refers to the mix of debt and equity financing a company uses to fund its operations and growth.

M&M Proposition I

A principle of corporate finance stating that, under certain conditions, the value of a company is not affected by how it is financed, regardless of whether the company is financed by debt or equity.

Value of the Firm

The total worth of a company based on its current market capitalization plus any debts, and minus any cash on the company's balance sheet.