In Solving a Binomial Problem, If the Evaluation Required Only

question 98

Multiple Choice

In solving a binomial problem, if the evaluation required only finding the probability of all P events, and N = 40, evaluating P ⁴⁰ would be more accurate than using the normal approximation. Assume no rounding.

• A) T
• B) F
• C) It depends on the value of P
• D) if P = Q = .50, the normal approximation would be more accurate.

---

Definitions:

Interest Rate

The percentage of an amount of money charged for its use over a specified period, often annually, by lenders to borrowers.

Shareholder

An individual or entity that owns one or more shares of stock in a publicly-traded company, making them partial owners.

Firm's Profits

The financial gains a firm obtains after deducting all expenses, taxes, and costs from its total revenues.

Financial Capital Markets

Marketplaces where individuals and institutions can trade financial securities, commodities, and other fungible assets.