- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 4. Common Probability Distributions
- Subject 6. Normal Distribution
CFA Practice Question
Two normal distributions, X and Y, have means of 10% and 15% respectively. What is the mean of the following linear combination: 2X + 3Y?
A. 62.5%
B. 65%
C. 31.3%
Explanation: The linear combination of two normal distributions is also a normal distribution. Its mean = 2 x 10% + 3 x 15% = 65%.
User Contributed Comments 2
| User | Comment |
|---|---|
| enetis | is this a joke? i spent 5 min trying to figure out if this was a trick question. |
| edrei7 | Multiplications, divisions, additions, and subtractions affect means. But only the first two affect variances. |