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- Title
Probabilistic Approaches to Return on Investment and Residual Income: A Comment.
- Authors
Chan, K. H.; Lam, S. F.; Tang, Roger
- Abstract
This comment demonstrates as erroneous the method Ferrara proposed for computing the mean, standard deviation, and alternative probability intervals of ROI based on normality assumptions. To develop alternative probability intervals at different levels of significance, it is necessary to recompute the Geary transformation after substituting appropriate standard normal values in the equation. To estimate the mean and standard deviation of ROI, the use of Taylor series approximations provides a justifiable methodology.
- Subjects
RATE of return; INVESTMENTS; PROBABILITY theory; STANDARD deviations; INVESTMENT analysis; APPROXIMATION theory; EXPECTED returns
- Publication
Accounting Review, 1979, Vol 54, Issue 3, p643
- ISSN
0001-4826
- Publication type
Article