The central hypothesis of investment theory is that nondiversifiable risk is rewarded by a higher expected return. Hypothesis testing supplies probabilistic answers to such concerns as whether a certain average is just the luck of the draw. In other words, the objective is to measure the significance of the difference between the sample mean and the population mean.

All of the other answers reduce receivables days. A key assumption of the receivables days calculation is that sales occur at a fairly constant level. If however, there is any form of sales build-up towards the end of the financial year, then the receivables days can be misleading. A large sale near the end of the year would increase sales and also the ending balance in Accounts Receivable.

If events are independent, then the joint probability of them occurring together is just the product of the individual probabilities. So P(AC) = 0.25 * 0.40 = 10%. To this, we multiply the probabilities of B and D failing to increase: 10% * (1 - 0.50)*(1 - 0.30) = 3.5%.

Convertibles are particularly attractive to those investors who want to participate in the rise of hot growth companies while being insulated from a drop in price should the stocks not live up to expectations.

Increase in stock and housing prices increases real wealth of households, and thus increases the aggregate demand.