Explain about normal probability distribution.

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Answer 1

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Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

Chapter 6, Problem 1CRP

To determine

Explain about normal probability distribution.

Expert Solution & Answer

Explanation of Solution

Normal probability distribution:

The normal probability distribution is a continuous distribution. It is a bell shaped distribution which is centered round the value of mean. Since the distribution is symmetric the values of mean, median and mode are same for normal distribution. Also, almost all the data values fall within the three standard deviations of the mean in normal distribution.

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Please solving problem2 Problem1 We consider a two-period binomial model with the following properties: each period lastsone (1) year and the current stock price is S0 = 4. On each period, the stock price doubleswhen it moves up and is reduced by half when it moves down. The annual interest rateon the money market is 25%. (This model is the same as in Prob. 1 of HW#2).We consider four options on this market: A European call option with maturity T = 2 years and strike price K = 5; A European put option with maturity T = 2 years and strike price K = 5; An American call option with maturity T = 2 years and strike price K = 5; An American put option with maturity T = 2 years and strike price K = 5.(a) Find the price at time 0 of both European options.(b) Find the price at time 0 of both American options. Compare your results with (a)and comment.(c) For each of the American options, describe the optimal exercising strategy.

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What is the standard scores associated to the left of z is 0.1446

Answer 2

Question

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

Chapter 6, Problem 1CRP

To determine

Explain about normal probability distribution.

Expert Solution & Answer

Explanation of Solution

Normal probability distribution:

The normal probability distribution is a continuous distribution. It is a bell shaped distribution which is centered round the value of mean. Since the distribution is symmetric the values of mean, median and mode are same for normal distribution. Also, almost all the data values fall within the three standard deviations of the mean in normal distribution.

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Answer 3

Question

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

Chapter 6, Problem 1CRP

To determine

Explain about normal probability distribution.

Expert Solution & Answer

Explanation of Solution

Normal probability distribution:

The normal probability distribution is a continuous distribution. It is a bell shaped distribution which is centered round the value of mean. Since the distribution is symmetric the values of mean, median and mode are same for normal distribution. Also, almost all the data values fall within the three standard deviations of the mean in normal distribution.

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Answer 4

Question

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

Chapter 6, Problem 1CRP

To determine

Explain about normal probability distribution.

Expert Solution & Answer

Explanation of Solution

Normal probability distribution:

The normal probability distribution is a continuous distribution. It is a bell shaped distribution which is centered round the value of mean. Since the distribution is symmetric the values of mean, median and mode are same for normal distribution. Also, almost all the data values fall within the three standard deviations of the mean in normal distribution.

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Answer 5

Chapter 6, Problem 1CRP

To determine

Explain about normal probability distribution.

Expert Solution & Answer

Explanation of Solution

Normal probability distribution:

The normal probability distribution is a continuous distribution. It is a bell shaped distribution which is centered round the value of mean. Since the distribution is symmetric the values of mean, median and mode are same for normal distribution. Also, almost all the data values fall within the three standard deviations of the mean in normal distribution.

Answer 6

Chapter 6, Problem 1CRP

To determine

Explain about normal probability distribution.

Expert Solution & Answer

Explanation of Solution

Normal probability distribution:

The normal probability distribution is a continuous distribution. It is a bell shaped distribution which is centered round the value of mean. Since the distribution is symmetric the values of mean, median and mode are same for normal distribution. Also, almost all the data values fall within the three standard deviations of the mean in normal distribution.

Answer 7

Chapter 6, Problem 1CRP

To determine

Explain about normal probability distribution.

Answer 8

Expert Solution & Answer

Explanation of Solution

Normal probability distribution:

The normal probability distribution is a continuous distribution. It is a bell shaped distribution which is centered round the value of mean. Since the distribution is symmetric the values of mean, median and mode are same for normal distribution. Also, almost all the data values fall within the three standard deviations of the mean in normal distribution.