An Exponential Probability Distribution

question 47

Multiple Choice

An exponential probability distribution

• A) is a continuous distribution.
• B) is a discrete distribution.
• C) can be either continuous or discrete.
• D) must be normally distributed.

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Definitions:

Inflation Premium

The additional amount investors require on the return of an investment to compensate for the loss of purchasing power due to inflation.

Treasury Bill

Short-term government securities issued at a discount from the face value and maturing at par.

Yield Curve

A line that plots the interest rates, at a set point in time, of bonds having equal credit quality but differing maturity dates.

Normal Yield Curve

A graphical representation that shows interest rates on bonds of different maturities tend to increase the longer the term to maturity, under normal market conditions.