The mean amount of gasoline and services charged by Key Refining Company credit customers is $70 per month. The distribution of amounts spent is approximately normal with a standard deviation of $10. What is the probability of selecting a credit card customer at random and finding the customer charged between $70 and $83?
Answer(s): A
z = (x-u)/sigma. z1 = 70 - 70/10 = 0 and z2 = 83 - 70/10 = 1.3. For z = 1.3, the area under the curve is 0.4032.
Two events, A and B, are independent if:
Answer(s): D
This is the definition of independence.
If you deposit $4,250 today into a savings account paying 6% per year, compounded semiannually, how much is in your account in 4 years?
Answer(s): E
On the BAII Plus, press 8 N, 6 divide 2 = I/Y, 4250 PV, 0 PMT, CPT FV. On the HP12C, press 8 n, 6 ENTER 2 divide i, 4250 PV, 0 PMT, FV. Note that the answer will be displayed as a negative number. Make sure the BAII Plus has the P/Y value set to 1.
A stock has the following returns over 4 years: +5%, -6%, +8%, +3%. The annual arithmetic and geometric rates of return over the 4 years are:
The mean equals (5% + (-6%) + 8% + 3%)/4 = 2.5%The geometric mean equals (1.05 * 0.94 * 1.08 * 1.03)^(1/4) = 2.36% Note that the geometric mean is less than the mean.
What is the annual Internal Rate of Return of this series of annual cash flows: Year 0: <$15,000>, Year 1:$5,000, Year 2: $8,000, Year 3: $11,000? (Note that the <> are used to indicate a negative number).
On the BAII Plus, press CF 2nd CLRWork 15000 +/- ENTER DownArrow 5000 ENTER DownArrow DownArrow 8000 ENTER DownArrow DownArrow 11000 ENTER DownArrow DownArrow 2nd Quit. Then press Irr CPT.On the HP12C, press these keys: 15000 CHS BlueShift CFo 5000 BlueShift CFj 8000 BlueShift CFj 11000 BlueShift CFj Then press YellowShift Irr. The "DownArrow" represents the downward-pointing arrow on the top row of the BAII Plus keyboard. Make sure the BAII Plus has the P/Y value set to 1.
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