Each year Money magazine consultants compile a list of 50 bl
Each year Money magazine consultants compile a list of 50 blue-chip stocks. These stocks are analyzed and suggestions are made about which ones to buy, which should be held, and which should be sold. Let us assume that in one issue the consultants recommended 17 “buys” and published this buy list with the quoted prices of each stock. Stock price Syntex 23.00 H.J. Heinz 40.75 Marion Merrell Dow 49.95 Rite Aid 56.00 Eli Lilly 47.46 GM E shares 44.75 Merck 39.26 Schering-Plough 53.25 Warner Lambert 42.63 British Telecom 29.75 Borden 57.44 Stanhome 49.00 McGraw-Hill 31.25 glaxo Holdings 33.00 Abbott Labs 43.32 Hubbell B Shares 65.00 Bristol-Meyers 37.35 Create a frequency table with group data. Let each group have a range of $8.75. The first group should be $23.00<$31.75. (There should be 5 groups total, the last one should be 58.00<66.75) write the summation of the last column at the bottom. Summation___________. What is the standard deviation of the grouped data____________. What is the probability that one stock was chosen at random, that it would cost more then $55?_________. What is the probability that if one stock was chosen at random that it would cost less then $50?________. What is the probability that if one stock was chosen at random, that it would cost less then $70?________. Calculate a z score for a $53.25 stock __________.
Solution
Here the frequency table is given as-
LCB UCB   Frequency   Cumulative Freq
 23.00   31.75 3 3
 31.75   40.50 3 6
 40.50   49.25 6 12
 49.25   58.00 4 16
 58.00   66.75 1 17
Summation=17
Mean=43.3309
Standard deviation of the grouped data=10.0598
Now we assume that the stock price(X) follow normality with mean=43.3309 and sd 10.0598.
Then,P(X>55)=0.12303
P(X<50)=0.746317
P(X<70)=0.995988
Z-score for $53.25 stock=0.986012

