probability of a company's stock price
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The average stock price for companies making up the S&P 500 is $30,and the standard deviation is $8.20. Assume the stock prices are normally distributed.
a. What is the probability that a company will have a stock price of at least $40?
b. What is the probability that a company will have a stock price no higher than $20?
c. How high does a stock price have to be to put a company in the top 10%?
Please explain how to find answer for above questions.
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Solution Summary
The probability of a company's stock price is assessed.
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Suppose X denotes the stock price of a company that belongs to S&P 500. Given, X follows normal distribution with mean $30 and standard deviation $8.20.
Standardizing we get Z = (X-30)/8.20 follows standard normal distribution.
1. Probability that a company will have a stock price of at ...
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