The Tread Life of a Particular Brand of Tire Is

question 42

Essay

The tread life of a particular brand of tire is a random variable best described by a normal
distribution with a mean of 60,000 miles and a standard deviation of 8600 miles. If the
manufacturer guarantees the tread life of the tires for the first 49,680 miles, what
proportion of the tires will need to be replaced under warranty?

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Definitions:

Short-Term Investment

Financial assets that are expected to be converted into cash or sold within a year.

Monetary Assets

Monetary assets are financial assets that are cash or can be quickly converted into a known amount of cash with minimal risk of changes in value.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Notes Receivable

Financial assets representing money owed to the holder of the note, usually in the form of a formal written agreement.