Question

The daily stock price for International Business Machines (IBM) historically has followed an approximately normal distribution (when adjusting for inflation) with a mean of $131.327 and standard deviation of $2.9474 Approximately 28.26% of days IBM had a stock price greater than what dollar amount?

Question 11 options:

1)

129.63

2)

136.32

3)	We do not have enough information to calculate the value.

4)

126.33

5)

133.02

Answer 1

Solution :

Given that,

mean = = 131.327

standard deviation = = 2.9474

Using standard normal table,

P(Z > z) = 28.26%

1 - P(Z < z) = 0.2826

P(Z < z) = 1 - 0.2826 = 0.7174

P(Z < 0.57 ) = 0.7174

z = 0.57

Using z-score formula,

x = z * +

x = 0.57 * 2.9474 + 131.327

= 133.022

Minimum amount = 133.02

Option 5 ) is correct.