Chapter 8, Problem 2Q

### Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250

Chapter
Section

### Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250
Textbook Problem

# The probability distribution of a less risky expected return is more peaked than that of a riskier return. What shape would the probability distribution be for (a) completely certain returns and (b) completely uncertain returns?

(a)

Summary Introduction

To explain: The shape of the probability distribution for completely certain returns.

Probability Distribution:

The probability distribution shows all the expected values which a random variable can take within a given range. For creating a probability distribution, the maximum and minimum values are predetermined and within that range, the random variables occurring are shown.

Explanation
• The probability distribution curve shows the distribution of the random variable in a given set of determined value.
• The curve, in case of completely certain results, is a vertica...

(b)

Summary Introduction

To explain: The shape of the probability distribution for completely uncertain returns.

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