Suppose the Probability of Producing a Defective Light Bulb from a Production

question 255

Multiple Choice

Suppose the probability of producing a defective light bulb from a production line is the same over an interval of 90 minutes.Which of the following distributions would you use to determine the probability that a defective light bulb will be produced in a 15 minutes interval?

• A)Normal distribution.
• B)Poisson distribution.
• C)Uniform distribution.
• D)Exponential distribution.

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Definitions:

Volatility

A statistical measure of the dispersion of returns for a given security or market index, often associated with the degree of risk or uncertainty.

Systematic Risk

The risk inherent to the entire market or a whole market segment, which cannot be mitigated through diversification alone.

Opportunity Sets

The array of possible investment opportunities or combinations that are available to an investor.

Systematic Risk Principle

A principle stating that investors need to be compensated for taking on increased levels of undiversifiable risk.