If X Is a Poisson Random Variable with a Mean

question 56

Multiple Choice

If x is a Poisson random variable with a mean of 10, what is the probability that x is greater than or equal to 2?

• A) .9972
• B) .0028
• C) .9995
• D) .0005

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Definitions:

Option

A financial derivative that gives the buyer the right, but not the obligation, to buy or sell an underlying asset or instrument at a specified strike price prior to or on a specified date.

Gamma

A measure of the rate of change of an option's delta in relation to the underlying asset's price.

Risk-Free Rate

The theoretical return on investment with no risk of financial loss, typically associated with government bonds.

American Call Option

A type of options contract that gives the holder the right, but not the obligation, to buy a specified amount of an underlying asset at a predetermined price before or at the option's expiration.