Which of the Following Assumptions Concerning the Probability Distribution of the Random

question 63

Multiple Choice

Which of the following assumptions concerning the probability distribution of the random error term is stated incorrectly?

• A)The distribution is normal.
• B)The mean of the distribution is 0.
• C)The variance of the distribution increases as X increases.
• D)The errors are independent.

---

Definitions:

Factored Receivables Financing

A financial transaction where a business sells its accounts receivable to a third party at a discount in exchange for immediate cash.

Compensating Balance

A minimum balance that must be maintained in a bank account, often required by banks as a condition for granting a loan or extending credit.

Assigned Receivables Financing

A financing method where a company uses its accounts receivable as collateral to receive a loan or advance.

Accounts Receivable Factoring

A financial deal in which a company trades its outstanding invoices to an external entity at a reduced price to get cash instantly.