A First Course in Probability (10th Edition)
10th Edition
ISBN: 9780134753119
Author: Sheldon Ross
Publisher: PEARSON
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Transcribed Image Text:The below three graphs show probability density functions (PDF) of three different random varlables Red, Green and Blue. Let P1 be the unknown price ofaac
one year, P1 is a random varlable. Let PO-1, so the share price now is $1. This one dollar is a constant, It is not a variable.
frequency
2,6
Red/ 0.9
0.4
0.3
Blue
Green,
0.2
0.1
-2
variable
3
Which of the below statements is NOT correct?
Oa Blue is a stock's future price (P1), with a minimum value of zero.
O b. Red is a stock's net discrete return (NDR), with a minimum value of negative one.
Oc. Blue is a stock's log gross discrete return (LGDR), with a minimum value of zero.
O d. Green is normally distributed with the same mean and median.
O e. Red is log-normally distributed, and the mean is higher than the median.
2.
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