Assuming That the Change in Daily Closing Prices for Stocks

question 3

Multiple Choice

Assuming that the change in daily closing prices for stocks on the New York Stock Exchange is a random variable that is normally distributed with a mean of $0.35 and a standard deviation of $0.33. Based on this information, what is the probability that a randomly selected stock will be lower by $0.40 or more?

• A) 2.27
• B) 0.4884
• C) 0.0116
• D) 0.9884

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Definitions:

Lurking Variable

A variable that affects both variables of interest in a study but was not included in the study, potentially confounding the results.

Outdoor Temperature

The temperature of the air outside, which can vary widely depending on the weather, time of day, and geographic location.

Association

A relationship or link between two or more variables, where changes in one variable correspond to changes in the other.

Life Expectancy

The average period that an individual is expected to live, based on statistical averages.