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Answer:
(a) z=-0.59
(b) Joe will invest in Mean Corporation. The probability of getting an annual return grater than 11% is 72.3%.
Step-by-step explanation:
We have a normal distribution for the annual return of the stock.
This distribution has mean of 13.9% and s.d. of 4.9%.
If X=11%, we can calculate its corresponding z-value as:
The z-value is z=-0.5918.
The probabilty of P(X>11%)=P(y>-0.5918) is, by the standarized normal distribution table, equal to 0.723.
As its P(y>-0.5918)=P(X>11%)=0.723 bigger than the 70% threshold, Joe will invest in Mean Corporation.