- CFA Exams
- CFA Exam: Level I 2021
- Study Session 3. Quantitative Methods (2)
- Reading 9. Common Probability Distributions
- Subject 5. The Binomial Distribution

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**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%.

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**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 |