Exhibit 6-3 Consider the Continuous Random Variable X, Which Has a Uniform

question 40

Multiple Choice

Exhibit 6-3
Consider the continuous random variable X, which has a uniform distribution over the interval from 20 to 28.
-Refer to Exhibit 6-3. The probability density function has what value in the interval between 20 and 28?

• A)0
• B)0.050
• C)0.125
• D)1.000

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Definitions:

Annuity Due

A financial product that pays out a series of payments at the beginning of each period, such as monthly or annually.

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return, commonly used to appraise long-term projects.

Discount Rate

The interest rate used to determine the present value of future cash flows in discounted cash flow analysis. It reflects the opportunity cost of capital.

Present Value

The value at present of future cash receipts or a lump sum, taking into consideration a specified rate of return.