For the 900 trading days from January 2003 through Jul 2006 the daly closing pri
ID: 3353930 • Letter: F
Question
For the 900 trading days from January 2003 through Jul 2006 the daly closing price of BM stock (n S) s weil modelied by a Nornal model with moan $76 40 and standard dovion 6 79 Use the 68 95-99 7 Rulo to approx mato the tollowing probabütos other than using technology to fnd the valaes nbove precnely Complete parts ia) though id a)Acconi g toms modo. what the probabity nat onarar domly selected day nows pened the stock price closed below$9686 (Type rteger or a decimal ) b)Accohngtonn mode( whotthe probabity not on rondomly selected dey now, pened the stck mce cesed ebov. $90077 Tyee an integer or a decimal c)According to thn nodel what is the probability that on a andomly selected day in s perodheslock prce closed between 76 49 The probabitys 00 0 Type an integer or a decimal)Explanation / Answer
a) Z is approximately 3.
99.7 rule states that 99.7% values lie within 3 standard deviations from the mean. We have to add the 0.15% area to the left of the central 99.7%. Hence, the answer is 99.85%
b) Z = 2 here
95% values lie within 2 standard deviation. P( z>2 = 5%/2=2.5%
) Probability that z lies between 3 and 0 is 99.7/2 = 49.85%