Chapter 6: In class Problems

MULTIPLE CHOICE.    Choose the one alternative that best completes the statement or answers the question.

Which of the following about the normal distribution is not true?

1)

_______
A)
Theoretically, the mean, median, and mode are the same.
B)
It is a discrete probability distribution.
C)
About 2/3 of the observations fall within ±1 standard deviation from the mean.
D)
Its parameters are the mean, μ, and standard deviation, σ.

The value of the cumulative standardized normal distribution at 1.5X is 0.9332. The value of X is

2)

_______
A)
0.10

B)

1.00

C)

1.50

D)

0.50

SHORT ANSWER.    Write the word or phrase that best completes each statement or answers the question.

Given that X is a normally distributed variable with a mean of 50 and a standard deviation of 2, find the probability that X
is between 47 and 54.

3)   

_____________

Suppose Z has a standard normal distribution with a mean of 0 and standard deviation of 1. The probability that Z is
between -2.33 and 2.33 is ________.

4)   

_____________
Suppose Z has a standard normal distribution with a mean of 0 and standard deviation of 1. So 27% of the possible Z
values are smaller than ________.

5)   

_____________

Suppose Z has a standard normal distribution with a mean of 0 and standard deviation of 1. So 50% of the possible Z
values are between ________ and ________ (symmetrically distributed about the mean).

6)   

_____________

A company that sells annuities must base the annual payout on the probability distribution of the length of life of the
participants in the plan. Suppose the probability distribution of the lifetimes of the participants is approximately a normal
distribution with a mean of 68 years and a standard deviation of 3.5 years. What proportion of the plan recipients die
before they reach the standard retirement age of 65?

7)   

_____________

MULTIPLE CHOICE.    Choose the one alternative that best completes the statement or answers the question.

If we know that the length of time it takes a college student to find a parking spot in the library parking lot follows a
normal distribution with a mean of 3.5 minutes and a standard deviation of 1 minute, 75.8% of the college students will
take more than how many minutes when trying to find a parking spot in the library parking lot?

8)

_______
A)
3.4 minutes

B)

2.8 minutes

C)

4.2 minutes

D)

3.2 minutes

True or False: A worker earns $15 per hour at a plant in China and is told that only 2.5% of all workers make a higher
wage. If the wage is assumed to be normally distributed and the standard deviation of wage rates is $5 per hour, the
average wage for the plant is $7.50 per hour.
9)

_______
A)
True

B)

False

SHORT ANSWER.    Write the word or phrase that best completes each statement or answers the question.

You were told that the amount of time lapsed between consecutive trades on a foreign stock exchange market followed a
normal distribution with a mean of 15 seconds. You were also told that the probability that the time lapsed between two
consecutive trades to fall between 16 to 17 seconds was 13%. The probability that the time lapsed between two
consecutive trades would fall below 13 seconds was 7%.    What is the probability that the time lapsed between two
consecutive trades will be between 13 and 16 seconds?

10)   

_____________

You were told that the mean score on a statistics exam is 75 with the scores normally distributed. In addition, you know
the probability of a score between 55 and 60 is 4.41% and that the probability of a score greater than 90 is 6.68%. What is
the probability of a score between 90 and 95?

11)   

_____________

SCENARIO 6-1

The number of column inches of classified advertisements appearing on Mondays in a certain daily newspaper is
normally distributed with population mean of 320 and population standard deviation of 20 inches.

Referring to Scenario 6-1, for a randomly chosen Monday, what is the probability there will be less than 340 column
inches of classified advertisement?

12)   

_____________

Referring to Scenario 6-1, for a randomly chosen Monday, what is the probability there will be between 280 and 360
column inches of classified advertisement?

13)   

_____________

Referring to Scenario 6-1, for a randomly chosen Monday the probability is 0.1 that there will be less than how many
column inches of classified advertisements?
14)   

_____________

MULTIPLE CHOICE.    Choose the one alternative that best completes the statement or answers the question.

Referring to Scenario 6-1, a single Monday is chosen at random. State in which of the following ranges the number of
column inches of classified advertisement is most likely to be

15)

______
A)
320 - 340.

B)

300 - 320.

C)

330 - 350.

D)

310 - 330.

SHORT ANSWER.    Write the word or phrase that best completes each statement or answers the question.
SCENARIO 6-6

According to Investment Digest, the arithmetic mean of the annual return for common stocks over an 85-year period was
9.5% but the value of the variance was not mentioned. Also 25% of the annual returns were below 8% while 65% of the
annual returns were between 8% and 11.5%.    The article claimed that the distribution of annual return for common stocks
was bell-shaped and approximately symmetric. Assume that this distribution is normal with the mean given above.
Answer the following questions without the help of a calculator, statistical software or statistical table.

Referring to Scenario 6-6, find the probability that the annual return of a random year will be less than 11.5%.

16)   

_____________

Referring to Scenario 6-6, find the probability that the annual return of a random year will be more than 11.5%.

17)   

_____________

Referring to Scenario 6-6, find the probability that the annual return of a random year will be between 7.5% and 11%.

18)   
_____________

Referring to Scenario 6-6, find the two values that will bound the middle 50% of the annual returns?

19)   

_____________

Referring to Scenario 6-6, 10% of the annual returns will be at least what amount?

20)   

_____________

1)

B
2)
B
3)
0.9104
4)
0.9802
5)
-0.61
6)
-0.67 and 0.67 or -0.68 and 0.68
7)
0.1957 using Excel or 0.1949 using Table E.2
8)
B
9)
B
10)
70.04% or 0.7004
11)
4.41% or 0.0441
12)
0.8413
13)
0.9545 using Excel or 0.9544 using Table E.2
14)
294.4
15)
D
16)
0.90 or 90%
17)
0.10 or 10%
18)
0.65 or 65%
19)
8% and 11%
20)
11.5%