An Analyst Wants to Simulate Observations from a Normal Distribution

question 23

Multiple Choice

An analyst wants to simulate observations from a Normal distribution that has a mean of 41 and a standard deviation of 3.The analyst draws a random number from a normally distributed table of random numbers.The random number is -2.00.The simulated value is:

• A) 31
• B) 35
• C) 38
• D) 43
• E) none of the choices are correct.

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Definitions:

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows, influencing investment decisions and valuation.

Compounded Interest

Interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan.

Effective Annual Rate

The real interest rate on an investment or loan, taking into account the effect of compounding interest as opposed to just the nominal or stated rate.

Compounded Monthly

Interest on a loan or investment calculated monthly on both the initial principal and the accumulated interest from previous periods.