Page 107 - FINAL CFA SLIDES DECEMBER 2018 DAY 3

ROQ, 24 - 25 Session Unit 3:
10. Common Probability Distributions

C. F(x) is the cumulative probability, P(x < 20) here. Because all the observations in this
distribution are between 4 and 10, the probability of an outcome less than 20 is 100%.

B. With only two possible outcomes,
there must be some positive
probability for each. If this were not
the case, the variable in question
would not be a random variable, and
a probability distribution would be
meaningless. It does not matter if one
of the possible outcomes happens to
be zero.
B. µ ± 2σ. Approximately 95% of the outcomes for a normally distributed random

variable are within two standard deviations of the mean.

A. 1 – F(2) = 1 – 0.9772 = 0.0228

B. ln(2) = 0.6931

A. Using the tables, the cdf for –1.3 is 9.68%, which is the probability of

returns less than 2%.