The probability distribution of a less risky expected return is more peaked than that of a… The probability distribution of a less risky expected return is more peaked than that of a riskier return. What shape would the probability distribution have for (a) completely certain returns and (b) completely uncertain returns?

Which is more likely a less risky return?

Retirement account distributions are among the most… The probability distribution of a less risky return is more peaked than that of a riskier return. What shape would the probability distribution have for?

How is the probability distribution used in finance?

Probability Distribution is a statistical tool that represents graphically the chances and different outcomes that a random variable can assume. In finance, Probability distribution is used to evaluate the risk on an investment. Become a Study.com member to unlock this answer!

How are risk and rates of return summed?

Each outcome is multiplied by its probability of occurrence, and then these products are summed. For example, suppose a 1-year term policy pays $10,000 at death, and the probability of the policyholder’s death in that year is 2%. Then, there is a 98% probability of zero return and a 2% probability of $10,000:

Which is an example of a discrete probability distribution?

Let us take an investment A, which has a 20% probability of giving a 15% return on investment, a 50% probability of generating a 10% return, and a 30% probability of resulting in a 5% loss. This is an example of calculating a discrete probability distribution for potential returns.

What is the shape of the probability distribution?

(a) The shape of the probability distribution of an asset that supplies investors with completely certain returns would be a vertical line. Assuming… See full answer below. Our experts can answer your tough homework and study questions.