The Local Police Department Must Write,on Average,five Tickets a Day

question 152

Multiple Choice

The local police department must write,on average,five tickets a day to keep department revenues at budgeted levels.Suppose the number of tickets written per day follows a Poisson distribution with a mean of 6.5 tickets per day.Interpret the value of the mean.

• A) Half of the days have less than 6.5 tickets written and half of the days have more than 6.5 tickets written.
• B) If we sampled all days, the arithmetic average or expected number of tickets written would be 6.5 tickets per day.
• C) The number of tickets that is written most often is 6.5 tickets per day.
• D) The mean has no interpretation since 0.5 tickets can never be written.

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Definitions:

Bond Discount Amortization

The process of gradually writing off the discount on a bond over the life of the bond, reflecting the increase in its value as it nears maturity.

Carrying Value

The net amount at which an asset is valued on the balance sheet, taking into account depreciation, amortization, and impairment costs.

Effective-Interest Method

A method of amortizing the discount or premium on bonds payable over the life of the bonds, providing a periodic interest expense that reflects a constant rate of interest.

Discount on Bonds Payable

The difference between the face value of a bond and its selling price when a bond is sold for less than its face value.