Its 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.