QMB 2100 TEST 2 QUESTIONS WITH
100% CORRECT ANSWERS
We can think of the expected value of a random variable X as ______. - Answer-Long-
run average of the random variable values generated over infinity many independent
repetitions
Risk Averse - Answer-Demands a positive expected gain as compensation for taking
risk.
Risk Neutral - Answer-Completely ignores risk and makes his/her decisions solely on
the basis of expected gains.
Risk Loving - Answer-May be willing to take a risk even if the expected gain is negative
Random Variable - Answer-Summarizes the results of an experiment in terms of
numerical values.
Continuous Variable (Random) - Answer-A variable that assumes uncountable values in
an interval
Discrete Random Variable - Answer-Assumes a countable number of distinct values
Poisson Random Variable (True) - Answer-Counts the number of occurrences of a
certain event over a given interval of time or space
Continues Random Variable (True) - Answer-Characterized by uncountable values and
can take an any value within an interval
The standard normal table is also referred to as the 2 table - Answer-TRUE
Classical Probability - Answer-A probability often used in games of chance. It is based
on the assumption that all outcomes are equally likely.
Two defining properties of probability - Answer-- The probability of occurrence of any
event is between 0 and 1
- If a set of events is mutually exclusive and exhaustive, the probabilities of those events
sum to 1
100% CORRECT ANSWERS
We can think of the expected value of a random variable X as ______. - Answer-Long-
run average of the random variable values generated over infinity many independent
repetitions
Risk Averse - Answer-Demands a positive expected gain as compensation for taking
risk.
Risk Neutral - Answer-Completely ignores risk and makes his/her decisions solely on
the basis of expected gains.
Risk Loving - Answer-May be willing to take a risk even if the expected gain is negative
Random Variable - Answer-Summarizes the results of an experiment in terms of
numerical values.
Continuous Variable (Random) - Answer-A variable that assumes uncountable values in
an interval
Discrete Random Variable - Answer-Assumes a countable number of distinct values
Poisson Random Variable (True) - Answer-Counts the number of occurrences of a
certain event over a given interval of time or space
Continues Random Variable (True) - Answer-Characterized by uncountable values and
can take an any value within an interval
The standard normal table is also referred to as the 2 table - Answer-TRUE
Classical Probability - Answer-A probability often used in games of chance. It is based
on the assumption that all outcomes are equally likely.
Two defining properties of probability - Answer-- The probability of occurrence of any
event is between 0 and 1
- If a set of events is mutually exclusive and exhaustive, the probabilities of those events
sum to 1
