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A portfolio manager holds five bonds in a portfolio and each bond has a 1-year default probability of 17%. The event of default for each of the bonds is independent.
Given this, could you determine the appropriate statistical measures that represent the central tendency (average) and dispersion (variability) for the number of bond defaults expected to occur in the upcoming year?
A
Mean = 0.15, standard deviation = 0.71
B
Mean = 0.85, standard deviation = 0.84
C
Mean = 0.85, standard deviation = 0.71
D
Mean = 0.15, standard deviation = 0.84