Question
Classify the random variables below according to whether they are discrete or continuous. a. The net revenue for a particular firm b. The rate of return on a particular stock c. The percentage change in stockholder's equity d. The rate of return on a particular investment e. The net expenses for a particular firm f. The dollar value of stockholder's equity A. Is the net revenue for a particular firm discrete or continuous? B. discrete. because the variable can measured on an interval
Ask by Grant Riley. in the United States
Nov 24,2024
Real Tutor Solution
Tutor-Verified Answer
Answer
All variables are continuous as they can take any value within a range, including fractions and decimals.
Solution
scale and can take on any value within that interval.
A. Is the net revenue for a particular firm discrete or continuous?
B. Continuous. because the net revenue can take on any value within a certain range, including fractions and decimals.
B. is correct. The net revenue for a particular firm is a continuous random variable because it can take on any value within a certain range, including fractions and decimals. This is true for all the variables listed:
A. The net revenue for a particular firm
B. Continuous
A. The rate of return on a particular stock
B. Continuous
A. The percentage change in stockholder's equity
B. Continuous
A. The rate of return on a particular investment
B. Continuous
A. The net expenses for a particular firm
B. Continuous
A. The dollar value of stockholder's equity
B. Continuous
All of these variables are continuous because they can take on any value within a certain range, including fractions and decimals.
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Simplify this solution Extra Insights
While it's true that net revenue can be expressed in whole numbers (like $1,000 or $5,000), it can also take on fractional values in practice (like $1,523.75), which makes it a continuous variable. So, even though we often think of revenue in terms of whole units, its possible values really form a continuous range. Let’s take a closer look at the rate of return on a particular stock—it too can be a little sneaky! Often represented as a percentage, it can take on any value from negative infinity to positive infinity, including fractional percentages. This means it’s continuous just like a flowing river of numbers, rather than existing in separate little pools!
