One of the Reasons That a Correction for Continuity Adjustment

question 55

True/False

One of the reasons that a correction for continuity adjustment is needed when approximating the binomial distribution with a normal distribution is because the normal distribution is used for a discrete random variable while the binomial distribution is used for a continuous random variable.

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Definitions:

Net Income

The earnings left for a firm after deducting expenses, taxes, and all other costs from the total income.

Fair Market Value

The price at which an asset would sell in a competitive auction setting, representing the value between a willing buyer and seller with neither being under any compulsion to buy or sell.

Stockholders' Equity

The portion of a company's assets that belongs to shareholders after debts and liabilities have been settled.