Assignment
I. The average amount of precipitation in Dallas, Texas, during the month of April is 3.5 inches (The World Almanac, 2000). Assume that a normal distribution applies and that the standard deviation is .8 inches.
a. What is the probability a company will have a stock price of at least $40?
b. What is the probability a company will have a stock price no higher than $20?
c. How high does a stock price have to be to put a company in the top 10%?
II. Trending volume on the New York Stock Exchange is heaviest during the first half hour (early morning) and last half hour (late afternoon) of the trading day. The early morning trading volumes (millions of shares) for 13 days in January and February are shown here (Barron's January 23, 2006; and February 27, 2006).
214 163 265 194 180
202 198 212 201
174 171 211 211
III. The probability distribution of trading volume is approximately normal.
a. Compute the mean and standard deviation to use as estimates of the population mean and standard deviation.
b. What is the probability that, on a randomly selected day, the early morning trading volume will be less than 180 million shares?
c. What is the probability that, on a randomly selected day, the early morning trading volume will exceed 230 million shares?
d. How many shares would have to be traded for the early morning trading volume on a particular day to be among the busiest 5% of days?
IV. The U.S. Bureau of Labor Statistics reports that the average annual expenditure on food and drink for all families is $5700 (Money, December 2003). Assume that annual expenditure on food and drink is normally distributed and that the standard deviation is $1500.
a. What is the range of expenditures of the 10% of families with the lowest annual spending on food and drink?
b. What percentage of families spend more than $7000 annually on food and drink?
c. What is the range of expenditures for the 5% of families with the highest annual spending on food and drink?