Random Variable X Has the Probability Function F(x) = X/6

question 63

Multiple Choice

Random variable x has the probability function f(x) = X/6, for x = 1, 2 or 3​ The expected value of x is

• A) 0.333.
• B) 0.500.
• C) 2.000.
• D) 2.333.

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Definitions:

Call Option

A financial contract giving the buyer the right, but not the obligation, to buy a stock, bond, commodity, or other asset at a predetermined price within a specific time frame.

Retiring Bonds

Retiring bonds involves the repayment of the principal amount of the bond issue by the issuer before its maturity, often to take advantage of lower interest rates.

Convertible Bonds

Bonds that can be converted into a predetermined number of the issuer's equity shares at certain times during the bond's life, usually at the discretion of the bondholder.

Carrying Value

The book value of assets and liabilities on a company's balance sheet, calculated as the original cost minus any depreciation, amortization, or impairment costs.