Chapter 4: Q170SE (page 282)
Assume that xis a binomial random variable with n = 100
and p = 5. Use the normal probability distribution to approximate
the following probabilities:
a.
b.
c.
d.
e.
f.
Short Answer
a.
b.
c.
d.
e.
f.
Chapter 4: Q170SE (page 282)
Assume that xis a binomial random variable with n = 100
and p = 5. Use the normal probability distribution to approximate
the following probabilities:
a.
b.
c.
d.
e.
f.
a.
b.
c.
d.
e.
f.
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Get started for freeTypes of finance random variables. Security analysts are professionals who devote full-time efforts to evaluating the investment worth of a narrow list of stocks. The following variables are of interest to security analysts. Which are discrete and which are continuous random variables?
a. The closing price of a particular stock on the New York Stock Exchange.
b. The number of shares of a particular stock that are traded each business day.
c. The quarterly earnings of a particular firm.
d. The percentage change in earnings between last year and this year for a particular firm.
e. The number of new products introduced per year by a firm.
f. The time until a pharmaceutical company gains approval from the U.S. Food and Drug Administration to market a new drug.
Executive coaching and meeting effectiveness. Can executive coaching help improve business meeting effectiveness? This was the question of interest in an article published in Consulting Psychology Journal: Practice and
Research(Vol. 61, 2009). The goal of executive coaching is to reduce content behaviors (e.g., seeking information, disagreeing/ attacking) in favor of process behaviors (e.g., asking clarifying questions, summarizing). The study
reported that prior to receiving executive coaching, the percentage of observed content behaviors of leaders had a mean of 75% with a standard deviation of 8.5%. In contrast, after receiving executive coaching, the percentage of observed content behaviors of leaders had a mean of 52%
with a standard deviation of 7.5%. Assume that the percentage
of observed content behaviors is approximately normally distributed for both leaders with and without executive coaching. Suppose you observe 70% content behaviors by the leader of a business meeting. Give your opinion on whether or not the leader has received executive coaching.
4.139 Load on timber beams. Timber beams are widely used inhome construction. When the load (measured in pounds) perunit length has a constant value over part of a beam, the loadis said to be uniformly distributed over that part of the beam.Uniformly distributed beam loads were used to derive thestiffness distribution of the beam in the American Institute of
Aeronautics and Astronautics Journal(May 2013). Considera cantilever beam with a uniformly distributed load between100 and 115 pounds per linear foot.
a. What is the probability that a beam load exceeds110 pounds per linearfoot?
b. What is the probability that a beam load is less than102 pounds per linear foot?
c. Find a value Lsuch that the probability that the beamload exceeds Lis only .1.
Stock market. Give an example of a continuous random variable that would be of interest to a stockbroker.
Buy-side vs. sell-side analysts’ earnings forecasts. Financial analysts who make forecasts of stock prices are categorized as either “buy-side” analysts or “sell-side” analysts. Refer to the Financial Analysts Journal (July/August 2008) comparison of earnings forecasts of buy-side and sell-side analysts, Exercise 2.86 (p. 112). The mean and standard deviation of forecast errors for both types of analysts are reproduced in the table. Assume that the distribution of forecast errors are approximately normally distributed.
a. Find the probability that a buy-side analyst has a forecast error of +2.00 or higher.
b. Find the probability that a sell-side analyst has a forecast error of +2.00 or higher
Buy-Side Analysts | Sell-Side Analysts | |
Mean | 0.85 | -0.05 |
Standard Deviation | 1.93 | 0.85 |
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