Question

The closing price of Schnur Sporting Goods Inc. common stock is uniformly distributed between $16 and $30 per share.

Answer 1

Answer:

a) 0.3571 = 35.71% probability that the stock price will be more than $25.

b) 0.1429 = 14.29% probability that the stock price will be less than or equal to $18.

Step-by-step explanation:

Uniform probability distribution:

An uniform distribution has two bounds, a and b.

The probability of finding a value of at lower than x is:

$P(X < x) = \frac{x - a}{b - a}$

The probability of finding a value between c and d is:

$P(c \leq X \leq d) = \frac{d - c}{b - a}$

The probability of finding a value above x is:

$P(X > x) = \frac{b - x}{b - a}$

Uniformly distributed between $16 and $30 per share.

This means that $a = 16, b = 30$

a) More than $25?

$P(X > x) = \frac{30 - 25}{30 - 16} = 0.3571$

0.3571 = 35.71% probability that the stock price will be more than $25.

b) Less than or equal to $18?

$P(X < 18) = \frac{18 - 16}{30 - 16} = 0.1429$

0.1429 = 14.29% probability that the stock price will be less than or equal to $18.