Financial Risk Manager Part 1
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Which of the following is an example of a continuous random variable?
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NNikitesh
A
The number of defective TV sets in a container
B
The number of visits recorded at a risk management consultancy office on a given day
C
The amount of time required to run a mile
D
None of the above
Explanation:
The amount of time required to run a mile is a continuous random variable because time can take an infinite number of possible outcomes within a given range (e.g., 4.5 minutes, 4.51 minutes, 4.512 minutes, etc.). Continuous random variables can take any value within an interval and are typically measured rather than counted.
Options A and B are discrete random variables:
- A. The number of defective TV sets in a container: This is countable and finite (0, 1, 2, 3, etc.)
- B. The number of visits recorded at a risk management consultancy office on a given day: This is also countable and finite (0, 1, 2, 3, etc.)
Discrete random variables have a finite or countably infinite number of possible values, while continuous random variables have an uncountably infinite number of possible values.
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