TD Ameritrade found out you were taking SRA 365 this semester and would like to capitalize on your high quality services! Ameritrade believes that variations in stock prices can help to determine who company is being pumped and dumped. You have been tasked with developing models that would flag suspicious trading patterns. This is a difficult task because stock prices fluctuate frequently throughout the day. After evaluating the patterns in the stock prices of three companies you determine that their means and standard deviations (SD) are as follows: Company Means and Standard Deviation Mean SD Firm A 1.5 0.71 Firm B 1.02 0.72 z-score to determine the probability that the stock price for Firm A will fall below a penny (i.e., $0.01). NOTE: Please round your final answer to 2 decimal places. Question 2 2 pts Use the space below to show your work for the calculations done in the previous question. Edit View Insert Format Tools Table 12pty Paragraph B I U A LV T' v |: BE3 1 0words > Question 3 5 pts While doing your calculations, Ameritrade has asked that you keep their most recent policy in mind. Ameritrade has instituted a policy in which firms with prices within -68% of normal distribution of scores are ignored, outside -68% (but within normal distribution of scores are monitored, and outside ~95% of the normal distribution of scores are restricted. This policy is based on the most recent fraudulent activities that took place at Firm X. Provide the cutoff values you would use to ignore, monitor, or restrict trade for Firm A based on the recent policy implemented by Ameritrade. Use the numeric values in the following graphic as a guide. HINT: You will need to use the means and SDs from the previous table and the 68-95-99 rule to create these cutoffs. 5 _ (1) _5 _12) _ 5 _13) 5 _(41 5 15 ) Insert Values for Firm A Edit View Insert Format Tools Table 12pt v Paragraph " B I U AZ T V ! Ben 1 0words Question 4 3 pts Given your calculations in the previous question, state the decision you would make (i.e.. ignore, monitor. or restrict trade) if the stock price for Firm A changed to each of the three values presented below. a) $1.00 b) $2.10 c) $0.85 Edit View Insert Format Tools Table 12pt ~ Paragraph 83 1 0words > Question 5 4 pts Calculate the z-score to determine the probability that the stock price for Firm B will fall below a penny (i.e., $0.01). NOTE: Please round your final answer to 2 decimal places and use the space below to show your work for the calculations you've done to arrive at your answer. Edit View Insert Format Tools Table 12pty Paragraph B I U A & T' V | : Question 6 4 pts Using the zscore tables &, and the zscores you calculated above for Firms A and B. determine the probability that the stock price for Firm A or Firm B will fall below a penny. NOTE: Please state your answer as a percent (e.g., X.XX]. Be sure to describe how you determined this combined probability in the space provided below. Edit View Insert Format Tools Table 12pt v Paragraph " B I U Av LV TV|:TAILEA Percentage of Area under the Normal Carve Colauren a shres the distance in standard de 1Nadav 191941 / 3 XICNadav