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Identify Each of the Variables in the Binomial Probability Formula P(x)=n!(nx)!x!px(1p)nxP ( x ) = \frac { n ! } { ( n - x ) ! x ! } \cdot p ^ { x } \cdot ( 1 - p ) ^ { n - x }

question 115

Essay

Identify each of the variables in the Binomial Probability Formula.
P(x)=n!(nx)!x!px(1p)nxP ( x ) = \frac { n ! } { ( n - x ) ! x ! } \cdot p ^ { x } \cdot ( 1 - p ) ^ { n - x } Also, explain what the fraction n!(nx)!x!\frac { n ! } { ( n - x ) ! x ! } computes.


Definitions:

Common Stock

A type of security that represents ownership in a corporation, giving holders voting rights and a share in the company's profits via dividends.

Stop-Buy Order

An order placed with a broker to buy a security once it reaches a certain price, used to limit loss or protect profit.

Short-Sell

A trading strategy where an investor borrows a security and sells it on the open market, planning to buy it back later for less money.

Loss

The financial result of an activity when costs and expenses exceed the revenues or returns generated.

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