Which of the Following Is NOT True of the Normal

question 14

Multiple Choice

Which of the following is NOT true of the normal probability distribution?

• A)two parameters, the mean and the standard deviation, determine the location and shape of the distribution
• B)the total area under the curve is always equal to 1
• C)approximately 95.5% of the values will be within three standard deviations of the distribution mean
• D)the highest point is at the mean, which is also the median and the mode
• E)the normal curve is symmetric

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Definitions:

Interest Rate

The percentage of a loan amount charged by a lender to a borrower for the use of assets, typically expressed as an annual percentage of the principal.

Arbitrage

The simultaneous purchase and sale of the same assets or commodities in different markets to profit from unequal prices.

Well-functioning Market

A market where resources are allocated efficiently, information is freely available, transaction costs are low, and property rights are protected.

Nominal Interest Rate

The percentage increase in money that borrowers pay lenders, not adjusted for inflation.