FRM Part I · FRM Exam Part I · Common Univariate Random Variables
A trading desk experiences operational error events that follow a Poisson distribution with a mean of 2 per month. What is the probability of exactly 3 errors in a given month? (Use e^-2 = 0.1353.)
The probability is 0.1804. Using the Poisson formula with lambda 2, P(3) equals e^-2 times 2 cubed divided by 3 factorial, or 0.1353 x 8 / 6, which gives about 0.1804.
- A0.1804Correct
- B0.2707
- C0.0902
- D0.1353
Explanation
Poisson: P(3) = e^-2 x 2^3 / 3! = 0.1353 x 8 / 6 = 0.1804. The value 0.2707 is P(1) or P(2), and 0.0902 results from dividing by 12 rather than 6 (wrong factorial use).
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