CFA Practice Question

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 2N 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.

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
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