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Suppose χ is a normally distributed random variable with μ=50 and σ=3 . Find a value of the random variable, call it χ0 , such that

a)P(χχ0)=.8413

b)P(χ>χ0)=.025

c)P(χ>χ0)=.95

d)P(41χχ0)=.8630

e) 10% of the values of role="math" localid="1652160513072" χare less thanrole="math" localid="1652160519976" χ0

f)1% of the values ofχ are greater thanχ0

Short Answer

Expert verified

Random variables are those variables with an unspecified number or even a procedure that gives scores to each of the results of an experiment.

Step by step solution

01

Step-by-Step SolutionStep 1: (a) The data is given below

The calculation is given below:

χ~N(μ,σ2)

Given,

μ=50σ=3

P(χχ0)=0.8413P(χχ0)=P(zz0)=0.8413z0=0.999815=χ0μσχ0=3(0.999815)+5053

02

b) The data is given below

The calculation is given below:

P(χχ0)=0.25P(χχ0)=1P(χχ0)=10.25=0.75P(χχ0)=P(zz0)=0.75z0=0.674490=χ0μσχ0=3(0.674490)+5052

03

c) The data is given below

The calculation is given below:

P(χχ0)=0.95P(χχ0)=1P(χχ0)=10.95=0.05P(χχ0)=P(zz0)=0.05z0=1.6745=χ0μσ

χ0=3(1.645)+5045


04

d) The data is given below

The calculation is given below:

P(41χχ0)=P(χχ0)P(χ41)=0.8630=P(zz0)=P(z41503)=0.8630=P(zz0)=P(z3)=0.8630P(zz0)0.00135=0.86435P(zz0)=0.86435z0=1.1=χ0μσχ0=3(1.1)+5053.3

05

e) The data is given below

The calculation is given below:

P(χ<χ0)=0.1P(χχ0)=P(zz0)=0.1z0=1.28155=χ0μσχ0=3(1.28155)+5046.155

06

f) The data is given below

The calculation is given below:

P(χ>χ0)=0.01P(χχ0)=1P(χ>χ0)=10.1=0.99P(χχ0)=P(zz0)=0.99z0=2.326=χ0μσ

χ0=3(2.326)+5056.978


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Most popular questions from this chapter

Executive networking and firm performance. Refer to the Journal of Accounting Public Policy (Vol. 34, 2015) study of the impact of executive networking on firm performance, Exercise 2.101 (p. 117). Recall that firm performance was measured as annual return on equity (ROE), recorded as a percentage. The mean ROE for the firms studied was 13.93%, and the standard deviation was 21.65%. Assume that these values represent m and s for the population ROE distribution and that this distribution is normal. What value of ROE will be exceeded by 80% of the firms?

Identify the type of continuous random variable—uniform,normal, or exponential—described by each of the following probability density functions:

a.f(x)=e-x77;x>o

b.f(x)=120;5<x<25

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Investment risk analysis. The risk of a portfolio of financial assets is sometimes called investment risk. In general, investment risk is typically measured by computing the variance or standard deviation of the probability distribution that describes the decision maker’s potential outcomes (gains or losses). The greater the variation in potential outcomes, the greater the uncertainty faced by the decision maker; the smaller the variation in potential outcomes, the more predictable the decision maker’s gains or losses. The two discrete probability distributions given in the next table were developed from historical data. They describe the potential total physical damage losses next year to the fleets of delivery trucks of two different firms.

Firm A




Firm B



Loss Next Year

Probabiity


Loss Next Year

Probability

0

0.01



0

0


500

0.01



200

0.01


1000

0.01



700

0.02


1500

0.02



1200

0.02


2000

0.35



1700

0.15


2500

0.3



2200

0.3


3000

0.25



2700

0.3


3500

0.02



3200

0.15


4000

0.01



3700

0.02


4500

0.01



4200

0.02


5000

0.01



4700

0.01


a. Verify that both firms have the same expected total physical damage loss.

b. Compute the standard deviation of each probability distribution and determine which firm faces the greater risk of physical damage to its fleet next year.

If a population data set is normally distributed, what isthe proportion of measurements you would expect to fallwithin the following intervals?

a.μ±σb.μ±2σc.μ±3σ

Suppose x is a normally distributed random variable with μ= 11 and σ= 2. Find each of the following:

a)P(10χ12)

b) P(6χ10)

c)P(13χ16)

d)P(7.8χ12.6)

e)P(χ13.24)

f)P(χ7.62)


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