Fundamentals of Financial Manageme...
Solutions
Fundamentals of Financial Manageme...
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)
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.
- 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)
To explain: The shape of the probability distribution for completely uncertain returns.
Chapter 8 Solutions
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