Question

2 The price of a stock is uniformly distributed between $35 and $45. (8) a. What is the probability that the stock price will be more than $427 b. What is the probability that the stock price will be less than or equal to $372 c. What is the probability that the stock price will be between $39 and 5437 d. Determine the expected price of the stock

Answer 1

solution : upper limit of uniform distribution (B) = 45$ lower limit of uniform distribution density function distribution for Uniform f(x) - - - 45-35 = = 1 To

it probability of a variable is ashred between x and ta having probability density function fox. then Plx, EX EX 2) = f(x), (x2-x) (a) stock price more than 42 $ means stack price is between 42 & to upper limit us pl 42 5 x 45)= fle). (45-42) = to X (3) = 0.3 (6) stock perice less than equal to 378 means stock price is between lower limit 35 & to 37 d. p/355x437) = f(x). ( 37-35) = to (2) - = 0.2

(e) stock price between 398 to 43 $ Pl 39 < x <42) - H2)-(43–29) = to xy = = 0.4 (d) Expected price of uniform destuibution - lower limit + upper limit expected price of stock - BTA = 45+35