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    Question 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!

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    Re: Help with what a question is asking

    I think your initial answer was correct. 50% for both.
    I don't have emotions and sometimes that makes me very sad.

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    Krazzy2013 (09-26-2017)

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    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.
    »Jetzt kann mich der Führer mal am Arsch lecken.« (Ernst Kuzorra, 1941)

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    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

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    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.
    I don't have emotions and sometimes that makes me very sad.

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