Question

2. Suppose a small university is trying to forecast expenses for the following year. They don’t know exactly what expenses will be but they think expenditures (in millions of $'s) will be 10.8 with a probability of 0.16, expenditures will be 12.5 with a probability of 0.29, expenditures will be 14.9 with a probability of 0.38, otherwise, expenditures will be 16.9. What is the probability that expenditures will be at least 14.9? (please express your answer using 2 decimal places) 3. You are considering buying a 100 shares of WalMart stock. In any given week, the stock can either increase in value by 4.3% or decrease in value by 1.9%. The probability that the stock increases is 0.57; otherwise, the stock decreases in price. Out of the next 79 weeks, how many weeks should we expect the stock to increase in price? (please round your answer to 2 decimal places)

3. You are considering buying a 100 shares of WalMart stock. In any given week, the stock can either increase in value by 4.3% or decrease in value by 1.9%. The probability that the stock increases is 0.57; otherwise, the stock decreases in price. Out of the next 79 weeks, how many weeks should we expect the stock to increase in price? (please round your answer to 2 decimal places

Answer 1

Solution

Q2

Let X = expenditures (in millions of $'s)

Then, given,

X = 10.8 with a probability of 0.16,

    = 12.5 with a probability of 0.29,

    = 14.9 with a probability of 0.38,

    = 16.9 with a probability of 0.17 [by subtraction]

So, the probability that expenditures will be at least 14.9

= P(X ≥ 14.9)

= P(X = 14.9) + P(X = 16.9)

= 0.38 + 0.17

= 0.55 Answer 1

Q3

Given that the stock can increase in value by 4.3% [i.e., 0.043],

Number of weeks out of 79 we expect the stock to increase in price

= 79 x 0.043

= 3.40 Answer 2

DONE