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Table: The HP Stock Exchange

-(Table: The HP Stock Exchange) The HP Stock Exchange lets members of HP's sales team buy and sell shares that pay off when sales fall within a certain range. A typical security would pay out $1, if and only if future sales fell within the specific range of that share. Accordingly, the trading price given in the table between 15,000 and 20,000 units implies that:
A) price per unit of sales is $0.40 if the sales ranges between 15,000 and 25,000 units.
B) price per unit of sales will increase at $0.40 per unit for sales between 15,000 and 20,000 units.
C) the probability of selling between 15,000 and 20,000 units is believed to be 40%.
D) the probability of selling between 15,000 and 20,000 is believed to be at least 40%.

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Table: The HP Stock Exchange

-(Table: The HP Stock Exchange) The HP Stock Exchange lets members of HP's sales team buy and sell shares that pay off when sales fall within a certain range. A typical security would pay out $1, if and only if future sales fell within the specific range of that share. Accordingly, the trading price given in the table between 15,000 and 20,000 units implies that:
A) price per unit of sales is $0.40 if the sales ranges between 15,000 and 25,000 units. 
B) price per unit of sales will increase at $0.40 per unit for sales between 15,000 and 20,000 units. 
C) the probability of selling between 15,000 and 20,000 units is believed to be 40%. 
D) the probability of selling between 15,000 and 20,000 is believed to be at least 40%.

Quizplus · Accepted Answer

The trading price of $0.40 implies that the market believes there is a 40% probability that sales will fall within the 15,000 to 20,000 units range.

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