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
Algebra ->
Probability-and-statistics
-> 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
Log On
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
