The Poisson Distribution Can Be Used to Approximate the Binomial

question 47

True/False

The Poisson distribution can be used to approximate the binomial distribution when the number of trials is greater than 20 and the probability of success is less than or equal to 0.05.

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Definitions:

Investment

The allocation of resources, usually money, in expectation of achieving a future return or profit.

Annual Dividend

The total amount of dividends a company pays out to its shareholders each year, usually quoted as an amount per share.

Constant Rate

A stable growth or decline rate over a period, often used in the calculation of interest and financial forecasting.

Discount Rate

This is the interest rate used in discounted cash flow (DCF) analysis to present values of future cash flows back to their value today.