Probabilistic Approaches to Return on Investment and Residual Income: A Comment.
The Accounting Review
1979
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.
- DOI
- 10.2308/tar-4496553
- Volume
- 54 (3)
- Pages
- 643-649
- Language
- en
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