Let the Lifetime of a New Jet Ski Be Represented

question 67

Multiple Choice

Let the lifetime of a new Jet Ski be represented by a lognormal variable, Y = e^X where X is normally distributed. Let the mean of the lifetime of the Jet Ski be six years with a standard deviation of three years. What proportion of the Jet Skis will last less than seven years?

• A) 0.2877
• B) 0.3707
• C) 0.6293
• D) 0.7131

---

Definitions:

Price Level

A measure of the average prices of goods and services in an economy at a given time, indicating the cost of living or inflation rate.

Dividend Yield

An economic indicator demonstrating the ratio of a company's annual dividends to its stock price.

Constant Rate

A fixed rate that does not change over the specified period of time.

Expected Return

The average of a probability distribution of all possible returns that an investment might generate.