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QMB 3200 Midterm 1 2024 Test with Questions and Answers|100% Solution
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QMB 3200 Midterm 1 2024 Test withQuestions and Answers|100% Solution
In Financial Applications, _______ measures risk - ✔✔Standard Deviation
In Financial Analysis, _______ measures return - ✔✔Expected Value
Binomial Probability Distribution - ✔✔A probability distribution showing the probability of
x "successes" in n independent trials.
Poisson Probability Distribution - ✔✔Shows the probability of x independent occurrences of an
event over a specified interval of time or space
Continuous Random Variable - ✔✔A random variable that may assume any numerical value in an
interval or collection of intervals
Difference Between Discrete and Continuous Random Variable - ✔✔Discrete random variables
are computed where the random variable takes on a specific value.
Continuous random variables are computed where the random variable is within an interval (A
single point is an interval of 0, so the probability of a single value in the continuous case is zero).
Uniform Probability Distribution - ✔✔A continuous probability distribution for which the probability
that the random variable will assume a value in any interval is the same for each interval of equal length.
exponential probability distribution - ✔✔a continuous distribution that is commonly used to
measure the time between events of interest.
, normal probability distribution - ✔✔A continuous probability distribution. Its probability
density function is bell-shaped and determined by its mean and standard deviation.
Characteristics of Normal Distribution - ✔✔1. Only two parameters: μ (mean) and σ
(standard deviation).
2. The highest point is the mean, which is also the median and the mode.
3. The mean can take on any numerical value.
4. The normal distribution is symmetric; skewness = 0
5. The standard deviation determines how flat or wide the normal curve is. Larger standard deviations
result in wider or flatter curves.
6. Probabilities for a normal random variable are given by the area under the normal curve. Total
area under the curve equals 1.
7.
68.3% of values are +/- 1 σ of the μ.
95.4% of values are +/- 2 σ of the μ.
99.7% of values are +/- 3 σ of the μ.
μ is 0 and the standard deviation is 1.
What determines the shape of the bell curve? - ✔✔Standard Deviation;
Larger standard deviations
result in wider or flatter curves.
Descriptive Analytics - ✔✔Describes Past Data
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