Data Analytics For Accounting
19th Edition
ISBN: 9781260375190
Author: RICHARDSON, Vernon J., Teeter, Ryan, Terrell, Katie
Publisher: Mcgraw-hill Education,
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Chapter 4, Problem 2MCQ
In the late 1960s, Ed Altman developed a model to predict if a company was at severe risk of going bankrupt. He called his statistic Altman’s Z-score, now a widely used score in finance. Based on the name of the statistic, which statistical distribution would you guess this came from?
- a.
Normal distribution - b. Poisson distribution
- c. Standardized normal distribution
- d. Uniform distribution
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Risk means, in today's language, the probability of something bad happening or an unfortunate outcome. Risk in finance, however, is defined as the variance of the probability distribution of returns.
a.) Why do these definitions seem contradictory?
b.) Reconcile the two ideas.
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long-term corporate bonds had an average return of 6.5 percent and a standard deviation of 8.5 percent. For the same
period, T-bills had an average return of 3.3 percent and a standard deviation of 3.1 percent. Use the NORMDIST function in
Excel to answer the following questions:
a. What is the probability that in any given year, the return on long-term corporate bonds will be greater than 10
percent? Less than 0 percent?
Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places,
e.g., 32.16.
b. What is the probability that in any given year, the return on T-bills will be greater than 10 percent? Less than 0
percent?
Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places,
e.g., 32.16.
c. In 1979, the return on long-term corporate bonds was -4.18 percent. How…
Carson Inc.'s manager believes that economic conditions during the next year will be strong, normal, or weak, and she thinks that the firm's returns will have the
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sample.) Do not round your intermediate calculations.
Economic
Conditions
Strong
Normal
Weak
O a. 17.49%
O b. 12.36%
O c. 22.49%
O
d. 10.10%
O e. 18.36%
Prob.
30%
40%
30%
Return
27.0%
13.0%
-17.0%
Chapter 4 Solutions
Data Analytics For Accounting
Ch. 4 - Prob. 1MCQCh. 4 - In the late 1960s, Ed Altman developed a model to...Ch. 4 - Justin Zobel suggests that revising your writing...Ch. 4 - Prob. 4MCQCh. 4 - The Fahrenheit scale of temperature measurement...Ch. 4 - _______ data would be considered the least...Ch. 4 - ________ data would be considered the most...Ch. 4 - Prob. 8MCQCh. 4 - Exhibit 4-8 gives chart suggestions for what data...Ch. 4 - Prob. 10MCQ
Ch. 4 - Prob. 1DQCh. 4 - Prob. 2DQCh. 4 - Prob. 3DQCh. 4 - Prob. 4DQCh. 4 - Prob. 5DQCh. 4 - Based on the data from datavizcatalogue.com, how...Ch. 4 - Prob. 7DQCh. 4 - Prob. 8DQCh. 4 - Prob. 9DQCh. 4 - Prob. 1PCh. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - According to Exhibit 4-8, which is the best chart...Ch. 4 - Prob. 5PCh. 4 - Prob. 6PCh. 4 - Prob. 7P
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