Suppose you own shares of a companys stock the price of whic

Suppose you own shares of a company\'s stock, the price of which has risen so that, over the past ten trading days, its mean selling price is $14.89. Over the years, the mean price of the stock has been $10.43 (X = $5.60.) You wonder if the mean selling price over the next ten days can be expected to go higher. Should you wait to sell, or should you sell now?

Solution

Normal Distribution
Mean ( u ) =10.43
Standard Deviation ( sd )=5.6
Normal Distribution = Z= X- u / sd ~ N(0,1)                  
P(X > 14.89) = (14.89-10.43)/5.6
= 4.46/5.6 = 0.7964
= P ( Z >0.796) From Standard Normal Table
= 0.2129                  
Past ten days has less probability. so we better to sell shares now