# Essay on Chapter 7 Financial Management

3943 Words Mar 17th, 2015 16 Pages
Chapter 7
Continuous Probability Distributions

1. a. a = 6 b = 10 b. 8, found by (6 + 10)/2 c. 1.1547 found by [pic] d. [1/(10 – 6)](10 – 6) = 1 e. 0.75, found by [1/(10 – 6)](10 – 7) f. 0.5, found by [1/(10 – 6)](9 – 7) (LO 2)

2. a. a = 2 b = 5 b. 3.5, found by (2 + 5)/2 c. 0.8660 found by [pic] d. [1/(5 – 2)](5 – 2) = 1 e. 0.8, found by [1/(5 – 2)](5 – 2.6) f. 0.2667, found by [1/(5 – 2)](3.7 – 2.9) (LO 2)

3. a.

b. Mean is 65 found by (60 + 70) / 2; Variance is 8.3333 found by [(70 – 60) ^ 2] / 12 c. 0.8 found by [1 / (70 – 60)] (68 – 60) d. 0.6 found by [1 / (70 – 60)] (70 – 64) (LO 2)

4. a. Mean is 2100
(LO 3)

9. a. 490 and 510, found by 500 ( 1(10) b. 480 and 520, found by 500 ( 2(10) c. 470 and 530, found by 500 ( 3(10) (LO 6)

10. a. about 68 percent b. about 95 percent c. over 99 percent (LO 6)

11. [pic] [pic] Adjusting for their industries, Rob is well below average and Rachel well above. (LO 4)

12. [pic] [pic] The first is slightly less expensive than average and the second is slightly more. (LO 4)
13. a. 1.25 found by [pic] b. 0.3944, found in Appendix B.1 c. 0.3085, found by [pic] Find 0.1915 in Appendix B.1 for z = – 0.5 then 0.5000 – 0.1915 = 0.3085 (LO 5)

14. a. z = 0.84, found by [pic] b. 0.2995, found in Appendix B.1 c. 0.1894, found by [pic] Find 0.3106 in Appendix B.1 for z = – 0.88, then 0.5000 – 0.3106 = 0.1894 (LO 5)

15. a. 0.3413, found by [pic] Then find 0.3413 in Appendix B.1 for a z = 1 b. 0.1587, found by 0.5000 – 0.3413 = 0.1587 c. 0.3336, found by [pic] Find 0.1664 in Appendix B.1, for a z = – 0.43, then 0.5000 – 0.1664 = 0.3336 (LO 5)

16. a. About 0.4332 from Appendix B.1, where z = 1.50 b. About 0.1915, where z = – 0.50 c. About 0.3085, found by 0.5000 – 0.1915 (LO 5)

17. a. 0.8276, first find z = – 1.5, found by ((44 – 50)/4) and z = 1.25 = (55 – 50)/4). The area between –1.5 and 0 is 0.4332 and the area between 0 and 1.25 is 0.3944, both from Appendix B.1. Then adding the two area we find that 0.4332 + 0.3944 = 0.8276. b. 0.1056, found by

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