Michael Bierach

Problem 6.32
Mean of 12.4 %
Standard Deviation of 20.6%

Common

Mean return of 5.2%

Standard Deviation of 8.6%

Tax Free

A.

Common stock positive return

Z = (0 - 12.4) / 20.6

Z=

-0.6019417

Area is

0.2743

1 - .2743 =

0.7257

72.57%
B.

Tax free positive return

Z = (0-5.2) / 8.6

Z=

-0.6046512

Area is

0.2743

1 - .2743 =

0.7257

72.57%
C.

Common stock will give more then 10%

Z = (10 - 12.4) / 20.6

Z=
Area is

-0.1165049
0.4522

1 - .4522

0.5478

54.78%

Tax Free will give more then 10%

Z = (10- 5.2) / 8.6

Z=

0.55813953

Area is

0.7123

1 - .7123

0.2877

28.77%
E

Common stock lose more then 10%

Z =( -10 - 12.4) / 20.6

Z=

-1.0873786

Area is

0.1379

13.79%
F.

Tax free lose more then 10%

Z = (-10 - 5.2) / 8.6

Z=

-1.7674419

Area is

0.0384
3.84%

Michael Bierach
Problem 6.40
We want the lowest 33%
Z of 33% equals-0.44
Z = (x - u) / standard deviation
"-0.44 = (X - 3000 ) / 500
X - 3000 =
X=
$2,780

-220
2780

Michael Bierach
Problem 6.48

205 Selected
117 Did not approve
Claim 65% would dissaprove
a.
205 * .65

133.25

square root of = (205)(.65)(.35) =

Z=

6.83

(116 - 133.25) / 6.83

Z=

-2.53

Area is 0.0057
Probability that the claim will be .57%

b.

With the probability that the chance of being 117 of fewer being .57%
I do believe the marketing managers claim.