When You Use the Poisson Distribution to Approximate the Binomial

question 121

True/False

When you use the Poisson distribution to approximate the binomial distribution, the standard deviation is nπ where n is the sample size and π is the probability of an event of interest.

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Definitions:

Corporate Bond Portfolio

A diversified collection of corporate bonds held by an investor or institution aimed at achieving specified financial goals.

Federal Tax Bracket

A range of incomes subject to a particular income tax rate, determined by the U.S. federal government.

Real After-tax Rate

The rate of return on an investment after adjusting for taxes and inflation, providing a clearer measure of purchasing power gain or loss.

Adverse Selection

A situation in which one party in a transaction has more or better information than the other, often leading to an imbalance in the transaction.