Fund A sells at $34 a share and has a 3-year average annual return of $3 per share. The risk measure of standard deviation is 16.1. Fund B sells at $45 a share and has. 3-year average annual return of $8 a share. The risk measure of standard deviation is 13.3. Sally Burkhardt wants to spend no more than $7000 investing in these two funds but she wants to obtain at least $700 in annual revenue. Sally also wants to minimize her risk. Determine how many shares of stock Sally should buy. Sally should buy shares of Fund A and (Round to the nearest whole number as needed.) shares of Fund B
Continuous Probability Distributions
Probability distributions are of two types, which are continuous probability distributions and discrete probability distributions. A continuous probability distribution contains an infinite number of values. For example, if time is infinite: you could count from 0 to a trillion seconds, billion seconds, so on indefinitely. A discrete probability distribution consists of only a countable set of possible values.
Normal Distribution
Suppose we had to design a bathroom weighing scale, how would we decide what should be the range of the weighing machine? Would we take the highest recorded human weight in history and use that as the upper limit for our weighing scale? This may not be a great idea as the sensitivity of the scale would get reduced if the range is too large. At the same time, if we keep the upper limit too low, it may not be usable for a large percentage of the population!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
