Use the Normal Distribution to Approximate the Desired Probability

question 74

Multiple Choice

Use the normal distribution to approximate the desired probability.
-A coin is tossed 20 times. A person, who claims to have extrasensory perception, is asked to predict the outcome of each flip in advance. She predicts correctly on 11 tosses. What is the probability of being correct 11 or more
Times by guessing? Does this probability seem to verify her claim?

• A) 0.4129, yes
• B) 0.0871, no
• C) 0.0871, yes
• D) 0.4129, no

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Definitions:

Effective Cost Of Capital

The actual cost of a company's funding after adjusting for various factors, including tax benefits, associated with different sources of capital.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, providing a measure that reflects the significance of each value.

Specific Costs

Costs that can be directly attributed to a particular project, department, or activity.

Required Return

The minimum return that keeps an investor in a particular stock. Generally a function of the risk perceived in the investment.