Let Xi be the price (in dollars) of stock i one year fromnow. X1 is N(15, 100) and X2 is N(20, 2025). Today I buythree shares of stock 1 for $12/share and two shares of stock2 for $17/share. Assume that X1 and X2 are independentrandom variables.a Find the mean and variance of the value of my stocksone year from now.b What is the probability that one year from now I willhave earned at least a 30% return on my investment?c If X1 and X2 were not independent, why would it bedifficult to answer parts (a) and (b)?

Let Xi be the price (in dollars) of stock i one year fromnow. X1 is N(15, 100) and X2 is N(20, 2025). Today I buythree shares of stock 1 for $12/share and two shares of stock2 for $17/share. Assume that X1 and X2 are independentrandom variables.a Find the mean and variance of the value of my stocksone year from now.b What is the probability that one year from now I willhave earned at least a 30% return on my investment?c If X1 and X2 were not independent, why would it bedifficult to answer parts (a) and (b)?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 37P

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