- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 4. Common Probability Distributions
- Subject 4. Discrete and Continuous Uniform 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 variance of the penalty.
B. 7%
C. 8.5%
A. 4.08%
B. 7%
C. 8.5%
Correct Answer: A
The variance is V(X) = (12 - 5)2/12 = 4.08%.
User Contributed Comments 12
| User | Comment |
|---|---|
| standaert | where do you get this formula? |
| bublik | There is no formula anywhere on this site. Anyway, it's V(X) = ((b-a)^2))/12 |
| minna | The formula's in the notes. |
| mtcfa | What the heck? This is about the 4th different calculation for variance I'v seen. |
| grantw | right. different distributions have different formulas to calculate variance! |
| got2pass | can someone tell me why the formula calls for dividing by 12? |
| irinalm | you can find derivation of variance here mash.dept.shef.ac.uk/Statistics/38_2_unifm_dist.pdf. it shows why it is 12. |
| Shalva | 2irinalm: Thanks for the link |
| Daddykay | When i dont understand a formula, i just memorize it, i dont have time to be asking why the formula is like that etc. Besides, no question will require that you prove any formula, right folk?? |
| anneki | right big daddykay |
| davidmort | Use this book for this section |
| eddington | Actually 4.08%% |