Hi All,
Could anyone help me understand the inverse function? I am not able to understand why are we getting the anti-derivative of the function to get the probability? in the questions they give you the probability as a function isn't a simple substitution of the value of x ? isn't f(x) =pr ?
[Qoute] Question 1 in study material
Assume the probability density function (pdf) of a zero-coupon bond with a notional value of $10.00 is given by f(x) = x/8 - 0.75
[End Qoute]
to recap the question, when do we use inverse of function to get the probability and when do we simply substitute x in the function to get the probability ?
Thanks,
Jalila
Could anyone help me understand the inverse function? I am not able to understand why are we getting the anti-derivative of the function to get the probability? in the questions they give you the probability as a function isn't a simple substitution of the value of x ? isn't f(x) =pr ?
[Qoute] Question 1 in study material
Assume the probability density function (pdf) of a zero-coupon bond with a notional value of $10.00 is given by f(x) = x/8 - 0.75
[End Qoute]
to recap the question, when do we use inverse of function to get the probability and when do we simply substitute x in the function to get the probability ?
Thanks,
Jalila
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