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**CFA Practice Question**

In a binomial probability distribution,

A. each trial can only take values between 0 and 1.

B. the probability graph is bell-shaped and symmetrical.

C. each trial can take one of two values.

**Explanation:**A binomial distribution with "N trials" arises when the same experiment is repeated N times. Each of the trails is known as a "Bernoulli" trial. It is the Bernoulli trial which can only take two distinct values, "success" and "failure." Each outcome of a binomial distribution with N trials is the string of N values generated by the individual Bernoulli trials. Clearly, the binomial distribution with N trials can take 2

^{N}values, even though each individual trial can have only two outcomes.

It is important that you understand the difference between the binomial distribution and the underlying Bernoulli trials themselves.

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**User Contributed Comments**
4

User |
Comment |
---|---|

jpducros |
OK with C, but what's wrong with B ? |

arudkov |
B is wrong cause u can have 2 outcomes - vote for democrats or vote for republicans. democrats have prob of 99% (hypotetical) to win. this is not bell shaped distribution - but binominal))) |

gillibean |
Binomial quite literally means consisting of two terms. This one is purely definition-based. |

Streberli |
what does the distribution look like then google shows bell-shaped and symmetrical curves |