- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 4. Common Probability Distributions
- Subject 5. Binomial Distribution
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.
B. 8.5%
C. 17%
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 |