Models of the pricing of stock options often make the

Reference no: EM13645199

Models of the pricing of stock options often make the assumption of a normal distribution. An analyst believes that the price of an Initech stock option varies from day to day according to normal distribution with mean $9.22 and unknown standard deviation.

a.The analyst also believes that 77% of the time the price of the option is greater than $7.00. Find the standard deviation of the price of the option.

b. Find the proportion of days when the price of the option is greater than $10.00?

c. Following the famous "buy low, sell high" principle, the analyst recommends buying Initech stock option if the price falls into the lowest 14% of the price distribution, and selling if the price rises into the highest 9% of the distribution. Mr. Statman doesn't know much about history, doesn't know much about biology, doesn't know much about statistics, but he does want to be rich someday. Help Mr. Statman find the price below which he should buy Initech stock option and the price above which he should sell.

Reference no: EM13645199

Questions Cloud

How would you detect the presence of mercury in a sample : how would you detect the presence of mercury in a sample potentially containing other group 1 cations? detail the

This coil is placed inside a solenoid with coil and : a 3.5 cm diameter circular coil with 29 turns of wire has resistance 1.6 omega. this coil is placed inside a solenoid

The convective heat transfer coefficients at the inside and : the inside temperature of a furnace is 1300oc and outside wall temperature is 40oc. the furnace wall is made up of 23

To see why consider a 9 v battery supplying 30 a to an : opening switches in highly inductive circuits can be dangerous even with low-voltage power sources. to see why consider

Models of the pricing of stock options often make the : models of the pricing of stock options often make the assumption of a normal distribution. an analyst believes that the

A tablet of vitamin c was analyzed to determine whether it : a tablet of vitamin c was analyzed to determine whether it did in fact contain as the manufacturer claimed 1 g of the

If an alternator coil is 17 cm in diameter and is spinning : a car alternator produces about 14 v peak output to charge the cars 12- v battery.if an alternator coil is 17 cm in

The pain reliever phenacetin is soluble in cold water to : the pain reliever phenacetin is soluble in cold water to the extent of 1.0 g 1310 ml and soluble in diethyl ether to

What is the difference between july and january : the average january temperature for rome italy is 44.2 degf and the average july temperature is 74.8 degf. how much

User Account

All Pages