Which process will transform Figure A onto Figure B ?
2 answers:
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Answer:
The stock price beyond which 0.05 of the distribution fall is $12.44.
Step-by-step explanation:
Normal Probability Distribution:
Problems of normal distributions can be solved using the z-score formula.
In a set with mean and standard deviation
, the zscore of a measure X is given by:
The Z-score measures how many standard deviations the measure is from the mean. After finding the Z-score, we look at the z-score table and find the p-value associated with this z-score. This p-value is the probability that the value of the measure is smaller than X, that is, the percentile of X. Subtracting 1 by the pvalue, we get the probability that the value of the measure is greater than X.
Mean of $8.52 with a standard deviation of $2.38
This means that
The stock price beyond which 0.05 of the distribution fall is
This is the 100 - 5 = 95th percentile, which is X when Z has a pvalue of 0.95. So X when Z = 1.645.
The stock price beyond which 0.05 of the distribution fall is $12.44.