SOLUTION: The rate of return for firms on the stock market is normally distributed with a 5% average rate and standard deviation of 2%. (A) What proportion of firms will return between 4%

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Question 1204887: The rate of return for firms on the stock market is normally distributed with a 5% average rate and standard deviation of 2%.
(A) What proportion of firms will return between 4% and 8%
(B) To the nearest percent, probability of a firm earning 3% or less per year?
If there are 1000 firms listed on the stock market, then how many earn a return less than 3%?
(C) To the nearest percent, probability of a firm earning 8% return in a year? If the are still 1000 firms listed, how many will earn 8% or higher?
(D) what rate of return would put a firm in the top 20%
Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!
the mean is 5% and the standard deviation is 2%.
you can use the normal distribution calculator at https://davidmlane.com/hyperstat/z_table.html to help answer this.

(A) What proportion of firms will return between 4% and 8%

.6247



(B) To the nearest percent, probability of a firm earning 3% or less per year?

.1587



If there are 1000 firms listed on the stock market, then how many earn a return less than 3%?

1000 * .1587 = 158.7

(C) To the nearest percent, probability of a firm earning 8% return in a year?

.0656 because any value greater than 7.5 and less than 8.5 will round to 8.



If there are still 1000 firms listed, how many will earn 8% or higher?

.0668 * 1000 = 66.8



(D) what rate of return would put a firm in the top 20%

6.683