The Reaching Beyond Our Borders Box in Chapter 19 Provides

question 45

Multiple Choice

The Reaching Beyond Our Borders box in Chapter 19 provides the following advice when trading in foreign stocks?

• A)Proceed with caution when investing in the stock of a firm where the home country has political unrest and an unstable currency.
• B)Avoid purchasing ADRs [American Depository Receipts] because you never win with the exchange rates.
• C)When buying or selling foreign securities,avoid mutual funds and exchange traded funds.They seem to have hidden stocks that are worthless intermixed with some good ones.
• D)Remember: the lower the risk,the higher the return.

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Definitions:

Poisson Distribution

A probability distribution that models the number of times an event occurs in a fixed interval of time or space when these events occur with a known constant mean rate and independently of the time since the last event.

Nuclear Power Plant

A facility that uses nuclear reactions to generate heat, which is then used to produce electricity.

Probability

A measure of the likelihood that an event will occur, often expressed as a number between 0 and 1.

Poisson Random Variable

A type of discrete random variable that expresses the probability of a given number of events occurring in a fixed interval of time or space.