Consider an investment of $WO = $10, 000 in Microsoft for one month, and the monthly 2 %3D return is R - N(0.05, 0.1 ). (a) What is the probability distribution of the end of month wealth W1 = WO(1 + R)? (b) Evaluate Pr(W1 < 9, 000). (c) Find the 95% Value-at-Risk (VaR) on the $10,000 investment in one month. That is to find VaR such that Pr(WO – W1 < VaR) = 0.95. (Ans: N(10500, 10002 ); 0.0668; 1145) If you can do it step by step that will be really helpful -

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Contingency Table

A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.

Binomial Distribution

Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.