quant probability question

aroranidhi2004
Finance Junkie
Posts: 41
Joined: Thu Oct 16, 2014 4:51 pm

quant probability question

For a stock, which of the following is least likely a random variable? Its:

A) stock symbol.

B) current ratio.

C) most recent closing price.

pls help with appropriate explanation.

Regards,
Nidhi

edupristine
Finance Junkie
Posts: 981
Joined: Wed Apr 09, 2014 6:28 am

quant probability question

A random variable means whose value can change at any point of time.

Now lets see each option one by one:

Stock symbol: A stock symbol will always remain same, irrespective of whatever the economic scenario is. for eg stock symbol for Reliance industries is RELIANCE. It will never change. So stock symbol is least likely to be a random variable. It's value is fixed.

Now, current ratio is a liquidity ratio which measures a company's ability to honor its short term obligations. This may vary based upon the operating income available at its disposal and many other factors. So, it is likely to change and hence can be classified as a random variable.

Most recent closing price changes everyday. Hence this is also a random variable.

So, the correct answer is option ( a ).

aroranidhi2004
Finance Junkie
Posts: 41
Joined: Thu Oct 16, 2014 4:51 pm
Thanks a lot..