Given a Poisson Random Variable X, Where the Average Number

question 12

Multiple Choice

Given a Poisson random variable x, where the average number of times an event occurs in a certain period of time or space is 1.5, then what is P(x = 2) ?

• A) 0.5020
• B) 0.2510
• C) 0.2231
• D) 0.01116

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Definitions:

Default Risk Premiums

The additional yield that investors require to hold debt that has a risk of default over a risk-free debt instrument.

Yield

Yield is the earnings generated and realized on an investment over a particular period of time, expressed as a percentage of the investment’s cost or current market value.

Treasury Bond

A long-term government bond with a maturity of more than 10 years used to fund federal expenditures.

Default Risk Premiums

The extra yield that an investor demands to compensate for the risk that the issuer of a bond may default on payment.