Unit 3 Discussion Example - First Response to Classmates’ Post First response: Read a classmate’s response. Consider investing in your classmate’s stock and assume that the daily change is normally distributed. Using Normal.xlsx, your classmate’s mean and standard deviation, determine the probability for the daily change of this stock to have: 1. A decrease of 0.5 point or more (X ≤ -0.5)? 2. An increase of more than 0.5 point (X > 0.5)? 3. A decrease of more 1 point or more (X ≤ -1)? 4. An increase of more than 1 point (X > 1)? In your own words, explain if these are high or low likelihoods for change. ****************************************************************************** ******* I will review the Crocs, Inc daily stock change. Using the mean = 0.094 and standard deviation of 0.14378865 and Normal.xlsx: 1) P (X ≤ -0.5) = 0.0098 = 0.98% 2) P (X > 0.5) = 0.0539 = 5.39% 3) P (X ≤ -1) = 0.00 = 0% 4) P (X > 1) = 0.0002 = 0.02% Common Data Common Data Mean 0.0922581 Mean 0.0922581 0.2535838 Standard Deviation 0.2535838 Standard Deviation Probability for X 1 3.5796531 0.0002 Comparing thefor decrease of 0.5 points or more, it is more likely to increase (5.39%) Probability X0.5 than to decrease P(X0.5)(0.98%). 0.0637 Comparing the decrease or increase of 1 point or more, it is more likely to increase however; it is a very low likelihood that the stock would change 1 point (only 0.02%). Unit 3 Discussion Example - Second Response to Classmates’ Post Second response: Read a different classmate’s response. Consider investing in your classmate’s stock. If you wanted to be 95% sure what the daily change would be, what range for a daily change would you expect? Use Normal.xlsx. ************************************************************************************* I will review the Crocs, Inc daily stock change for June 1 – July 15, 2016. With 95% probability, I would expect the daily change in the stock price to be between -0.40 and 0.59 points. Find X Values Given a Percentage Percentage 95.00% Z Value -1.96 Lower X Value -0.40 Upper X Value 0.59
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