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Reading 9: Common Probability Distributions - LOS d, (Part

Q6. Which of the following is NOT an assumption of the binomial distribution?

A)   The trials are independent.

B)   Random variable X is discrete.

C)   The expected value is a whole number.

Q7. For a certain class of junk bonds, the probability of default in a given year is 0.2. Whether one bond defaults is independent of whether another bond defaults. For a portfolio of five of these junk bonds, what is the probability that zero or one bond of the five defaults in the year ahead?

A)  0.0819.

B)  0.4096.

C)  0.7373.

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