Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

When returns from a project can be assumed to be normally distributed (represented by a symmetrical, bell-shaped curve), the areas under the curve can be

image text in transcribedimage text in transcribed

When returns from a project can be assumed to be normally distributed (represented by a symmetrical, bell-shaped curve), the areas under the curve can be determined from statistical tables based on standard deviations. For example, 68.26 percent of the distribution will fall within one standard deviation of the expected value (D = 10). Similarly, 95.44 percent will fall within two standard deviations (D + 20), and so on. An abbreviated table of areas under the normal curve is shown here. (Round the final answers to 2 decimal places.) Number of os from Expected Value 0.50 1.00 1.12 1.50 2.00 + or - 0.1915 0.3413 0.3686 0.4332 0.4772 + and - 0.3830 0.6826 0.7372 0.8664 0.9544 Assume Project A has an expected value of $37,000 and a standard deviation (O) of $7,400. a. What is the probability the outcome will be between $33,300 and $40,700? Probability 38.3% b. What is the probability the outcome will be between $22,200 and $51,800? Probability % c. What is the probability the outcome will be greater than $22,200? Probability % Assume Project A has an expected value of $37,000 and a standard deviation (C) of $7,400. a. What is the probability the outcome will be between $33,300 and $40,700? Probability 38.3 % b. What is the probability the outcome will be between $22,200 and $51,800? Probability % c. What is the probability the outcome will be greater than $22,200? Probability d. What is the probability the outcome will be less than $45,310? Probability e. What is the probability the outcome will be less than $33,300 or greater than $40,700? Probability 61.71%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Inside And Outside Liquidity

Authors: Bengt Holmstroem, Jean Tirole

1st Edition

0262518538, 9780262518536

More Books

Students also viewed these Finance questions