Ultimate access to all questions.
Explanation:
B is correct because the event space consists of all possible combinations of outcomes to which probabilities can be assigned. In this scenario with three possible outcomes (M, U, D), the event space contains all subsets of the sample space:
This gives us 2³ = 8 events in total.
Why other options are incorrect:
Key Concepts:
A research analyst at a boutique investment firm is assessing the impact of an increase in short-term interest rates on the credit rating of bank MSC. The analyst identifies all possible outcomes for the scenario and notes that the rating of bank MSC can either be maintained at the same level (M), be upgraded (U), or be downgraded (D). Which of the following correctly describes the event space?
A
The event space consists of four events.
B
The event space can be represented by the following set: {M, U, D, {M,U}, {M,D}, {U,D}, {M,U,D}, ∅}, where ∅ is the empty set.
C
The event space in this scenario is a continuous probability space.
D
The event space is identical to the sample space of the scenario.
No comments yet.