Which One of the Following Is NOT a Condition of the Binomial

question 95

Multiple Choice

Which one of the following is NOT a condition of the binomial distribution?

• A) Independent trials
• B) Only two outcomes
• C) Probability of success remains constant from trial to trial
• D) At least 10 observations

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Definitions:

Interest-Rate Change

A fluctuation in the cost of borrowing or the return on savings, which can significantly impact financial markets and economic conditions.

Term to Maturity

The duration of time until the final repayment date of a loan, bond, or other financial instrument.

Coupon Rate

The coupon rate is the interest rate that the issuer of a bond or other fixed-income security promises to pay to the holder annually, expressed as a percentage of the par value.

Interest-Rate Risk

Interest-Rate Risk refers to the risk of investment value changing due to fluctuations in the absolute level of interest rates, which can negatively affect fixed-income securities.