In Considering the Purchase of a Certain Stock, You Attach

question 43

Essay

In considering the purchase of a certain stock, you attach the following probabilities to
possible changes in the stock price over the next year. $$\begin{array} { | l | l | } \hline \begin{array} { l } \text { Stock Price Change During } \\\text { Next Twelve Months (\%) }\end{array} & \text { Probability } \\\hline + 15 & 0.2 \\\hline + 5 & 0.3 \\\hline 0 & 0.4 \\\hline - 5 & 0.05 \\\hline - 15 & 0.05 \\\hline\end{array}$$ What is the expected value, the variance, and the standard deviation? Which is the most
likely outcome? Sketch the cumulative distribution function.
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Definitions:

Psychological Health

The state of mental well-being where individuals realize their own abilities, can cope with normal stresses of life, work productively, and are able to contribute to their community.

Operant Conditioning

A process of influence in learning where the magnitude of behavior is adjusted by means of rewards or corrections.

Lever Pressing

An experimental task used in behaviorism to study learning and conditioning, where subjects press a lever to receive a reward.

Dependent Variable

The variable in an experiment that is tested and measured, often seen as the effect or outcome influenced by the independent variable.