1. ## Help with what a question is asking

I know how to calculate probabilities, but I want to make sure that I am understanding the question.

"What is the probability that the Dow Jones Index will increase by more than 11% in the coming year?"

and

"What is the probability Dow (X) will decrease more than 11% in the coming year?"

Dow Jones follows a Normal Distribution, Mean = 11% and St Dev = 13%

I feel like this is almost too simple.

P(X>11%)= 1-normdist(0.11,0.11,0.13)=50%

P(X<11%)= normdist(0.11,0.11,0.13)=50%

HOWEVER... I was worried maybe it mean 11% above and beyond the mean so P(X>22%) and P(X<0).

I just need clarification.

Thanks so much!

3. ## The Following User Says Thank You to Dason For This Useful Post:

Krazzy2013 (09-26-2017)

4. ## Re: Help with what a question is asking

"What is the probability Dow (X) will decrease more than 11% in the coming year?"
= what is the probabilty for < -11 (not: what is the probability for < +11).

With kind regards

K.

5. ## Re: Help with what a question is asking

Can you explain why please. I guess I don't understand why it would be -11%.

Thanks!

@Karabiner

6. ## Re: Help with what a question is asking

Actually after reading it closer I'm not sure anymore. I would suggest asking your instructor for clarification. If the hardest part of the problem is understanding what is being asked then that's more of an issue with the question than it is with the person answering it.

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