For each of the following uncertain quantities, discuss whether it is reasonable to assume that the probability
Question:
For each of the following uncertain quantities, discuss whether it is reasonable to assume that the probability distribution of the quantity is normal.
If the answer isn't obvious, discuss how you could discover whether a normal distribution is reasonable.
a. The change in the Dow Jones Industrial Average between now and a year from now.
b. The length of time (in hours) a battery that is in continuous use lasts.
c. The time between two successive arrivals to a bank.
d. The time it takes a bank teller to service a random customer.
e. The length (in yards) of a typical drive on a par 5 by Phil Michelson.
f. The amount of snowfall (in inches) in a typical winter in Minneapolis.
g. The average height (in inches) of all boys in a randomly selected seventh-grade middle school class.
h. Your bonus from finishing a project, where your bonus is $1000 per day under the deadline if the project is completed before the deadline, your bonus is $500 if the project is completed right on the deadline, and your bonus is $0 if the project is completed after the deadline.
i. Your gain on a call option on a stock, where you gain nothing if the price of the stock a month from now is less than or equal to $50 and you gain (P-50) dollars if the price P a month from now is greater than $50?
DistributionThe word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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Business Analytics Data Analysis And Decision Making
ISBN: 1209
6th Edition
Authors: S. Christian Albright, Wayne L. Winston