# Question

It’s been a bad day for the market, with 80% of securities losing value. You are evaluating a portfolio of 15 securities and will assume a binomial distribution for the number of securities that lost value.

a.* What assumptions are being made when you use a binomial distribution in this way?

b.* How many securities in your portfolio would you expect to lose value?

c.* What is the standard deviation of the number of securities in your portfolio that lose value?

d.* Find the probability that all 15 securities lose value.

e.* Find the probability that exactly 10 securities lose value.

f. Find the probability that 13 or more securities lose value.

a.* What assumptions are being made when you use a binomial distribution in this way?

b.* How many securities in your portfolio would you expect to lose value?

c.* What is the standard deviation of the number of securities in your portfolio that lose value?

d.* Find the probability that all 15 securities lose value.

e.* Find the probability that exactly 10 securities lose value.

f. Find the probability that 13 or more securities lose value.

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