4.102 BUY-SIDE VS. SELL-SIDE ANALYSTS' EARNINGS FORECASTS. Financial analysts who make forecasts of stock prices are categorized as either "buy-side" analysts or "sell-side" analysts. Refer to the Financial Analysts Journal (July/August 2008) comparison of earnings forecasts of buy-side and sell-side analysts, Exercise 2.86 (p. 87). The mean and standard deviation of forecast errors for both types of analysts are reproduced in the table. Assume that the distribution of forecast errors are approximately normally distributed. a. Find the probability that a buy-side analyst has a forecast error of +2.00 or higher. b. Find the probability that a sell-side analyst has a forecast error of +2.00 or higher.

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Mean
Standard
Deviation
Buy-Side
Analysts
0.85
1.93
Sell-Side Analysts
-0.05
0.85
Transcribed Image Text:Mean Standard Deviation Buy-Side Analysts 0.85 1.93 Sell-Side Analysts -0.05 0.85
4.102 BUY-SIDE VS. SELL-SIDE ANALYSTS' EARNINGS
FORECASTS. Financial analysts who make forecasts of stock
prices are categorized as either "buy-side" analysts or "sell-side"
analysts. Refer to the Financial Analysts Journal (July/August
2008) comparison of earnings forecasts of buy-side and sell-side
analysts, Exercise 2.86 (p. 87). The mean and standard
deviation of forecast errors for both types of analysts are
reproduced in the table. Assume that the distribution of forecast
errors are approximately normally distributed.
a. Find the probability that a buy-side analyst has a
forecast error of +2.00 or higher.
b. Find the probability that a sell-side analyst has a forecast
error of +2.00 or higher.
Transcribed Image Text:4.102 BUY-SIDE VS. SELL-SIDE ANALYSTS' EARNINGS FORECASTS. Financial analysts who make forecasts of stock prices are categorized as either "buy-side" analysts or "sell-side" analysts. Refer to the Financial Analysts Journal (July/August 2008) comparison of earnings forecasts of buy-side and sell-side analysts, Exercise 2.86 (p. 87). The mean and standard deviation of forecast errors for both types of analysts are reproduced in the table. Assume that the distribution of forecast errors are approximately normally distributed. a. Find the probability that a buy-side analyst has a forecast error of +2.00 or higher. b. Find the probability that a sell-side analyst has a forecast error of +2.00 or higher.
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