Assuming the Binomial Distribution Is Appropriate, If N = 6

question 70

Multiple Choice

Assuming the binomial distribution is appropriate, if N = 6 and P = 0.50, the probability of getting exactly 5 P events = _________.

• A) 0.1094
• B) 0.0156
• C) 0.0609
• D) 0.0938

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Definitions:

Modern Portfolio Theory

An investment theory that proposes optimizing the expected return for a given amount of portfolio risk, or alternatively minimizing risk for a given level of expected return, through diversification.

Markowitz

Harry Markowitz, an economist who developed Modern Portfolio Theory, emphasizing the benefits of diversification.

Excess Returns

Excess returns refer to the amount by which an investment outperforms a benchmark or risk-free rate.

Inside Trades

Transactions in a company's securities made by its officers, directors, or holders of more than 10% of the stock, typically subjected to strict regulatory scrutiny.