question archive David Viniar, Goldman Sachs' chief financial officer, said in 2007 that the market conditions were 25 normal distribution from the expected mean, an event which normal distribution assigns a probability of only marginally above zero
David Viniar, Goldman Sachs' chief financial officer, said in 2007 that the market conditions were 25 normal distribution from the expected mean, an event which normal distribution assigns a probability of only marginally above zero
Subject:StatisticsPrice: Bought3
David Viniar, Goldman Sachs' chief financial officer, said in 2007 that the market conditions were 25 normal distribution from the expected mean, an event which normal distribution assigns a probability of only marginally above zero. Even though normal (Gaussian) distribution is often used in predicting future outcomes, its failure to anticipate extreme events is clearly very limiting.
Critically assess the implication of Mr. Viniar's statement, and evaluate whether over-reliance on the Gaussian distribution in modelling of future volatility could have contributed to the market panic of 2007.
