Binomial parameters - Study guides, Class notes & Summaries

CAIA Level II Sample Exam 2024 Questions & Answers (Scored A+) Intuition of the Black-Derman-Toy interest rate model - ANSWER-Observed spot rates drive rate levels while implied rate volatilities drive rate spreads Understanding the intuition of imposing these two conditions helps in understanding the essence of the BDT model. The spot rates in the currently observed term structure drive the overall levels of the rates that are projected throughout the binomial tree. The implied volatili...

BQA 2113 Exam 3 review questions & Answers, graded A+/ verified. True or False: Since the binomial curve is discrete, its frequency distribution will never look like a normal curve. - -false In order to use the normal to approximate the binomial, μ +/- 3 std. dev. must - -must be between 0 and n The Normal Approximation to the Binomial can be used - -for any probability binomial as long as n is large The correction for continuity is used for - -correcting a discrete distribution μ i...

acceptance number - The maximum number of defects or defectives allowable in a sampling lot for the lot to be acceptable. acceptance quality limit (AQL) - In a continuing series of lots, a quality level that, for the purpose of sampling inspection, is the limit of a satisfactory process average. acceptance sampling - Inspection of a sample from a lot to decide whether to accept that lot. There are two types: attributes sampling and variables sampling. In attributes sampling, the presence or...

Intuition of the Black-Derman-Toy interest rate model - ANSWER-Observed spot rates drive rate levels while implied rate volatilities drive rate spreads Understanding the intuition of imposing these two conditions helps in understanding the essence of the BDT model. The spot rates in the currently observed term structure drive the overall levels of the rates that are projected throughout the binomial tree. The implied volatilities of options trading on short‐term rates (i.e., interest rate c...

Intuition of the Black-Derman-Toy interest rate model - ANSWER-Observed spot rates drive rate levels while implied rate volatilities drive rate spreads Understanding the intuition of imposing these two conditions helps in understanding the essence of the BDT model. The spot rates in the currently observed term structure drive the overall levels of the rates that are projected throughout the binomial tree. The implied volatilities of options trading on short‐term rates (i.e., interest rate c...

True - The relationship that links the predictors is highly non-linear. Correct Answer In Logistic Regression, the relationship between the probability of success and the predicting variables is non-linear. False - In logistic regression, there are no error terms. Correct Answer In Logistic Regression, the error terms follow a normal distribution. True - the logit function is also known as the log-odds function, which is the ln(P/1-p). Correct Answer The logit function is the log of the ra...

Bernoulli Trial - An experiment in which there are exactly two possible outcomes Binomial distribution - A random variable X represents the number of successes observed from the n Bernoulli trials Binomial Parameters - n = number of trials p = probability of success q = 1-p Binomial probability function (f(x)) - E[X] binomial function - E[x] = np var(x) binomial function - var(x) = npq MGF binomial function - Additive property of binomial function - Sum of independent binomially dist...

True - The relationship that links the predictors is highly non-linear. - In Logistic Regression, the relationship between the probability of success and the predicting variables is non-linear. False - In logistic regression, there are no error terms. - In Logistic Regression, the error terms follow a normal distribution. True - the logit function is also known as the log-odds function, which is the ln(P/1-p). - The logit function is the log of the ratio of the probability of success to th...

Contents Chapter 2: Probability..................................................................................................................................................1 2.2 Samples Spaces and the Algebra of Sets ..........................................................................................................1 2.3 The Probability Function..................................................................................................................................5 2.4 Co...

Test Bank for BMAL 590 Quantitative Research Techniques and Statistics A+ Updated 1. Which one of the following would not be considered a state of nature for a business firm? 2. Assume an investment is made a significant number of times using the same probabilities and payoffs. In this case, the average payoff per investment represents_____. 3. The level of doubt regarding the decision situation where both the possible states of nature and their exact probabilities of occurrence are known as w...