CFA Practice Question

There are 434 practice questions for this study session.

CFA Practice Question

Suppose that the penalty for withdrawing funds early from a certain account follows a uniform distribution on the interval from (5%,12%). Find the expected value of the penalty.

A. 7%
B. 8.5%
C. 17%
Correct Answer: B

The expected value is (12 + 5)/2 = 8.5%.

User Contributed Comments 4

User Comment
octavianus See SS03 A.d. Notes, bottom of the page, continuous uniform random variable, mean=(a+b)/2
StanleyMo Expected value = mean value
TammTamm All these expected, binomial variables is crazy.

OK now that I've vented, 12+5/2=8.5
davcer exp a+b/2 var (b-a)exp 2/12
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