The price of a stock is uniformly distributed between $30 and $50. (a) What is the probability that the stock price will be more than $40? (b) What is the probability that the stock price will be less than or equal to $35? (c) What is the probability that the stock price will be between $35 and $45? (d) Determine the expected price of the stock. (e) Determine the standard deviation for the stock pri
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!
- The price of a stock is uniformly distributed between $30 and $50.
(a) What is the
(b) What is the probability that the stock price will be less than or equal to $35?
(c) What is the probability that the stock price will be between $35 and $45?
(d) Determine the expected price of the stock.
(e) Determine the standard deviation for the stock price
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
