Question

5. The following variables are of interest to security analysts. Which are discrete and which are continuous random variables?

   1. The quarterly earnings of a particular firm

   2. The number of new products introduced per year by a firm

   3. The number of defective parts in a shipment of nuts and bolts

   4. The amount of ink used in printing a Sunday edition of the New York Times

Answer 1

Discrete variables are countable in a finite amount of time. For example, you can count the change in your pocket. You can count the money in your bank account. You could also count the amount of money in everyone’s bank accounts. It might take you a long time to count that last item, but the point is—it’s still countable.

Continuous Variables would (literally) take forever to count. In fact, you would get to “forever” and never finish counting them. For example, take age. You can’t count “age”. Why not? Because it would literally take forever. For example, you could be:
25 years, 10 months, 2 days, 5 hours, 4 seconds, 4 milliseconds, 8 nanoseconds, 99 picosends…and so on.

So we can say that all the variables here that is

The quarterly earnings of a particular firm ,The number of new products introduced per year by a firm, The number of defective parts in a shipment of nuts and bolts and The amount of ink used in printing a Sunday edition of the New York Times all are countable so all are discrete variables.