SOLUTION: It has been suggested that an investment portfolio selected randomly by throwing darts at the stock market page of The Wall Street Journal may be a sound (and certainly well-dive

Question 1141451: It has been suggested that an investment portfolio selected randomly by
throwing darts at the stock market page of The Wall Street Journal may be a sound (and
certainly well-diversified) investment. 11 Suppose that you own such a portfolio of 16
stocks randomly selected from all stocks listed on the New York Stock Exchange
(NYSE). On a certain day, you hear on the news that the average stock on the NYSE
rose 1.5 points. Assuming that the standard deviation of stock price movements that
day was 2 points and assuming stock price movements were normally distributed
around their mean of 1.5, what is the probability that the average stock price of your
portfolio increased?
Answer by Boreal(15235) (Show Source): You can put this solution on YOUR website!
the portfolio increased so long as the value of z is greater than -1.5/2, the -1.5 being the original mean minus the new price.
That is the probability of z>-0.75 or 0.7734
RELATED QUESTIONS
An investment consultant tells her client that the probability of making a positive... (answered by harpazo)

Stock A has an expected return of 10 percent and a beta of 1.0. Stock B has a beta of... (answered by solver91311)

Stock A has an expected return of 10 percent and a beta of 1.0. Stock B has a beta of... (answered by ikleyn)

A portfolio manager is managing a $10 million portfolio. Currently the portfolio is... (answered by solver91311)

2. A portfolio manager is managing a $10 million portfolio. Currently the portfolio is... (answered by ikleyn)

The Big Bull investment club has a portfolio that contains only two stocks. At the end of (answered by stanbon)

The Big Bull investment club has a portfolio that contains only two stocks. At the end of (answered by jorel1380)

Please assist me with the following question...thank you Cliff Swatner is single, 33,... (answered by bucky)