THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING

question 198

Multiple Choice

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING:
The following table presents the probability distribution function for the number of claims processed per hour at an insurance agency.

-Let a = -μ_x/σ_x and b = 1/σ_x in the linear function Z = a + bX.Which of the following statements is true?

• A)μ_z = μ_x
• B)μ_z = 0
• C)σ_z = a + bσ_x
• D)σ_z = σ_x

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Definitions:

Constant Growth

A situation where an economic, financial, or business variable grows at a steady and unvarying rate over time.

Retained Earnings

The portion of a company's profits not distributed to shareholders as dividends but kept within the company for reinvestment or to pay off debt.

Marginal Tax Rate

The tax rate applied to an additional dollar of income, representing the rate at which your next dollar of income will be taxed.

Cost Of Debt

The effective rate that a company pays on its total debt, indicating the average return that lenders demand for borrowing their capital.