SOLUTION: An analyst believes that the price of an IBM stock is a normally distributed random variable with mean $105 and variance 24. The analyst would like to determine a value such that t
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Question 465610: An analyst believes that the price of an IBM stock is a normally distributed random variable with mean $105 and variance 24. The analyst would like to determine a value such that there is a .90 probability that the price of the stock will be greater than the value. Find the required value. Answer by stanbon(75887) (Show Source):
You can put this solution on YOUR website! An analyst believes that the price of an IBM stock is a normally distributed random variable with mean $105 and variance 24. The analyst would like to determine a value such that there is a .90 probability that the price of the stock will be greater than the value. Find the required value.
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Find the z-value with a 0.90 right tail: invNorm(0.10) = -1.2816
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Use x = zs+u to find the corresponding price.
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price = -1.2816*24+105 = $74.24
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Cheers,
Stan H.
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