NOTE: Do not round. Be sure to state your answer as a percent (e.g., X.XX%). NOT

Question

NOTE: Do not round. Be sure to state your answer as a percent (e.g., X.XX%).

NOTE: Do not round. Be sure to state your answer as a percent (e.g., X.XX%).

3. Apply the rules of probability you learned in the lecture to determine the probability that the stock prices at both Firms A or B will fall below a penny (i.e., $0.01).

NOTE: Do not round. Be sure to state your answer as a percent (e.g., X.XX%).

4. Calculate the probability that the stock price at Firm B will NOT fall below a penny (i.e., $0.01).

NOTE: Do not round. Be sure to state your answer as a percent (e.g., X.XX%).

Explanation / Answer

Answer to question # 1)

we need to find probability of firm A to have below penny

thus x = 1

for firm A we got Mean (M) = 2.88

And the standard deviation (s) = 0.73

.

the Z value is :

z = (x - M) / s

on plugging the values we get:

z = (1 -2.88) / 0.73

z = -2.5753

.

Answer to question# 2)

we need to find probability of firm B to have below penny

thus x = 1

for firm B we got Mean (M) = 1.10

And the standard deviation (s) = 0.49

.

the Z value is :

z = (x - M) / s

on plugging the values we get:

z = (1 -1.10) / 0.49

z = -0.2041

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