The profitability of a blue-chip company is showed by ______.
Options
ABell Shape Curve
BU shape Curve
CJ shape Curve
DMixed curve
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Statistical Description of DataMTP Sep 24 Series IIQuestion 2765 of 295
All Questions Correct Answer
✅ Option a — Bell Shape Curve
All Options:
- ABell Shape Curve
- BU shape Curve
- CJ shape Curve
- DMixed curve
Detailed Solution & Explanation
The profitability (earnings or rate of return) of a established blue-chip company over a long period of time typically clusters around a stable, average rate of return:\n- In most years, the company will earn near-average profits, creating a high-frequency peak in the center.\n- In a few exceptionally good years, it will earn exceptionally high profits, forming a tapering right tail.\n- In a few exceptionally poor years (during economic recessions), it will earn very low profits or minor losses, forming a tapering left tail.\n\nGraphically, plotting the frequency of occurrence against profitability yields a symmetric or near-symmetric curve that is highest in the center and tapers off at both extremes. This is a **Bell-shaped curve**.\n- A **U-shaped curve** would suggest the company is either making extremely high profits or huge losses, with no average years, which is economically incorrect for a stable blue-chip firm.\n- A **J-shaped curve** is also incorrect as it suggests profits grow continuously without limit.\n\nHence, **Option A** is the correct answer.
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