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3. 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 (Jul./Aug.
3. 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 (Jul./Aug. 2008) comparison of earnings forecasts of buy-side and sell-side analysts. 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. Buy-Side Analysts Sell-Side Analysts Mean 0.85 -0.05 Standard Deviation 1.93 0.85 Source: Based on Groysberg, B., Healy, P., & Chapman, C. Financial Analysis Journal, Vol. 64, No. 4, Jul./Aug. 2008. 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
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