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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