Old Main Investment Service recommends the purchase of share

Old Main Investment Service recommends the purchase of shares of Dollar Department Stores. Old Main estimates that, in one year, the price of the shares will be at x where x is a random variable which is normally distributed with mean of $20 and a standard deviation of $2. What is the probability that in a year the shares will be selling for more than $20

Solution

Old Main Investment Service recommends the purchase of shares of Dollar Department Stores. Old Main estimates that, in one year, the price of the shares will be at x where x is a random variable which is normally distributed with mean of $20 and a standard deviation of $2. What is the probability that in a year the shares will be selling for more than $20

Z=(x-mean)/sd

Z value for 20, z=(20-20)/2 = 0

P( x >20) = p( z >0) =0.5

The required P=0.5