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The Central Limit Theorem States That If a Number of Probability

question 73

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The Central Limit Theorem states that if a number of probability distributions are summed,the variance of the sum equals the sum of the variances of individual distributions.


Definitions:

Par

The face value or nominal value of a bond, stock, or other financial instrument, typically the amount on which interest payments or dividends are calculated.

Zero-Coupon Bond

A debt security that does not pay periodic interest, instead being sold at a discount and maturing at face value, generating profit at redemption.

Interest Payments

The cash outflows that a borrower makes to a lender as a compensation for the use of borrowed funds.

Premium Bond

A bond that is trading above its par value in the financial markets.

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