- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 4. Common Probability Distributions
- Subject 1. Introduction and Discrete Random Variables
CFA Practice Question
A quoted stock price quoted in ticks of $0.01 is an example of a ______.
A. discrete random variable
B. continuous random variable
C. cumulative distribution function
Explanation: A quoted stock price quoted in ticks of $0.01 is an example of a discrete random variable.
User Contributed Comments 5
| User | Comment |
|---|---|
| dimanyc | because there's limited number of variables. |
| EtnicPlaymaker | Incorrect question. Upside growth potential of stock is not limited. Number of possible outcomes is unlimited. P( x = particular value ) -> 0 It can be aproximated by continuous random variable. |
| siramarc | EtnicPlaymaker: although the price can be as high as you want it to be, it is still a discrete random variable: i.e. you cannot have a price of 5.000001. |
| MattNYC | I knew this was a discrete number, but I chose B because i thought discrete #'s can't be decimals. I suppose they can when they cannot go to infinity, as is the case in this question. |
| leftcoast | MattNYC - discrete random variables can go to infinity, the difference is that unlike continuous, they are countable. |